The government has confirmed plans to allow existing annuity holders to sell their annuities in return for a cash lump sum from April 2016.
While it is currently possible for individuals to sell on their annuity income they incur a prohibitive tax charge for doing so - 55% in most cases but it can be as high as 70%.
This charge will be removed so people will only be taxed at their marginal rate.
They will then be able to do as they please with their pension savings, just as those approaching retirement will be able to do so from this April under measures announced in last year's Budget.
Their options include being able to draw down from their defined contribution pension pots a bit at a time or taking their pension as a lump sum.
Announcing the annuity reform, Chancellor George Osborne said: "Most people will probably decide to hang onto their annuity, but many may have good reasons to want to consider selling it on.
"For most people, sticking with that annuity is the right thing to do. But there will be some who would welcome being able to draw on that money as they choose – the same freedom we are offering those approaching retirement in April this year.
"So I am going to change the law to let that happen, and make sure we have the right guidance in place.
"People who've worked hard and saved hard all their lives should be trusted with their own pension."
How will the process work?
When an individual has found a willing buyer, their annuity company will continue to make payments during the customer's lifetime but once a sale has been agreed it will "reassign those payments to the purchaser". So the purchaser will give the annuity seller a cash lump sum in return for the income from the annuity company.
However, people wanting to sell their annuities will not have the right to simply sell it back to their original provider. And the government said it "is not minded to allow the original annuity provider to purchase, and then discontinue, their own customers' annuities".
The government will now launch a consultation into how this will work in practice and who should be permitted to purchase the annuity income.
Joanne Segars, chief executive of the National Association of Pension Funds, said: "It's clear to see how this fits with this Government's agenda for pensions but what is less clear is how savers will be protected."
She added: "The consultation would need to look at how the buy-back price of an annuity would be calculated so people selling their annuity could be assured of good value; and also consider a prescribed process for introducing buyers and sellers to avoid excess costs, which would inevitably be carried by the consumer."
The annuity sale idea has been championed by pensions minister Steve Webb and Ros Altmann, the government's older workers' advocate.
Altmann said: "I have heard from so many people who are furious that they had to buy their annuity in the past couple of years, whereas if they had been younger the new rules would have meant they could have avoided locking all their pension savings into a product they did not want."
Among the retirees that could benefit are those that need a lump sum for urgent spending needs such as paying off debts or for care. Likewise those policyholders whose annuities are only paying a matter of pounds a week may find they can make better use of a lump sum.