PLANS TO SELL ANNUITIES ABANDONED
- You will now not be able to sell your pension annuity from April 2017
- Anyone who bought an annuity before the pension freedoms will not be able to change their contract
Plans to sell annuities abandoned
The March 2015 budget announced plans to allow people to sell annuities from April 2017. The Government planned to allow you to sell your guaranteed income from a pension back to the provider (or a 3rd party) in exchange for a lump sum.
The main reason behind this was that flexible pensions reforms allow you to avoid buying an annuity from your pension plan. You can now withdraw all of your pension fund, although this would attract income tax on the withdrawal.
It was initially felt that those people who had been ‘forced’ into buying an annuity prior to April 2016 were unfairly disadvantaged. Therefore, the Treasury conducted a consultation with the pensions industry.
Reasons why selling annuities was abandoned
Generally, the pensions industry was not in favour of the proposals to allow people to sell their annuities back. Various product providers said that they would not participate in the market, partly because it looked to be a complicated transaction. With limited competition available to consumers it was felt that they would not be able to obtain enough value from the transaction.
In addition, the transaction would have required specialist advice, which would have been expensive. Finally, the transition from a guaranteed income for life to a lump sum would have inevitably led to high charges from the product provider, potentially eroding value to the consumer.
Overall, the feedback was that the proposals could have led to many consumers suffering disadvantages as a result of the transactions.
Secure your future and live your dreams with Prosper.
An introduction to Financial Planning and Wealth Management
See how we help people in your situation Prosper...
The Personal Finance Portal
Get your free mini guide on
How to Prosper in Retirement
This FREE Mini Guide is perfect for you if you are thinking about stopping or reducing work, but are unsure of what effect this would have on your income and lifestyle.
Find out how we can help you to Prosper during retirement.
Do you require a simple system to achieve clarity in your finances?
Focus on the 7 most important figures necessary to create your own basic financial plan.
Discover a straightforward way to eliminate the clutter in your financial life to gain clarity on what is actually important with your money.
About Dan Woodruff
Certified Financial Planner & Chartered Wealth Manager at Woodruff Financial Planning
Financial Planning helps you to navigate and anticipate significant life changes. I want to help you to ensure your money is managed wisely to give you the financial security that will fund the future and lifestyle that is important to you.