The government has announced that it is shelving plans to allow pensioners to sell their annuities for a lump sum.
Many experts had predicted that those who sold their annuities would be likely to get a poor deal and the government has decided not to take forward the plans to introduce a secondary annuities market because the consumer protections required could undermine the market’s development.
It has become clear that creating the conditions to allow a competitive market to emerge could not be balanced with sufficient consumer protections.
The Economic Secretary to the Treasury, Simon Kirby, said:
‘Allowing consumers to sell on their annuity income was always dependent on balancing the creation of an effective market with making sure consumers are properly protected.
It has become clear that we cannot guarantee consumers will get good value for money in a market that is likely to be small and limited.
Pursuing this policy in these circumstances would put consumers at risk – this is something that I am not prepared to do.
The government has always been clear that for the majority of people keeping their annuity incomes will be their best option, estimating that only 5% of people who currently hold an annuity would take advantage of this reform.’
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