Summer Budget 2015: Second hand annuity market delayed

Summer Budget 2015: Second hand annuity market delayed

Frustrated annuity holders wishing to sell their income will have to put their plans on hold.

In the March 2015 Budget, George Osborne announced that all retirees should be able to take advantage of the new pension freedoms and launched a consultation into the creation of a second hand annuity market. From April 2016 he said that some five million existing policyholders should be able to sell their lifelong income for a cash lump sum.

However, following that consultation, the government now says it needs to delay the launch until 2017 to ensure policyholders are given enough support in making their decision. It will now publish its plans for a secondary annuity market in the autumn as part of the Finance Bill 2016.

Andrew Tully, pensions technical director, Retirement Advantage, said: "There continues to be significant customer risk from the idea of creating a second-hand annuity market.

"The issues are complex so it is right to take stock and provide an appropriate timeframe to consult before the creation of a secondary market. We need to ensure consumers are protected from making poor value decisions, given they could lose 30% or more of their potential income because of costs and upfront tax."

The Association of British Insurers – which represents annuity providers – was also grateful for the delay. Huw Evans, director general for the ABI said:

"The new timetable announced today is a very welcome move and follows strong representations from the industry that the previous timetable was too quick. Providers want the reforms to the secondary annuity market to work for customers and it is right more time is allowed to get the right structures and regulation in place before going ahead."