Some five million retirees will be able to sell their annuity income for a cash lump sum from April 2017, according to plans revealed by the government today.The move should level the playing field with people retiring after April 2015 who are no longer forced into buying an annuity and are able to use their pension savings as they wish.Commenting on the announcement, economic secretary to the Treasury, Harriett Baldwin, said: “I’m delighted that we’re extending our landmark pension freedoms to over five million people with annuities from April 2017. People who’ve worked hard and saved hard all their lives should be trusted to make the right decision for them and with the help of the regulator we will ensure these people have the right information to do that.”The government will continue to work with the Financial Conduct Authority, during 2016 to ensure the new ‘second hand’ annuity market is sufficiently regulated. There will be a requirement for those with annuities above a certain threshold to seek independent financial advice before selling up and a brokering service will also help people to shop around for the best deal.However, while the news will undoubtedly be welcomed by existing retirees, experts are advising frustrated annuity holders to think carefully before cashing in an income that is guaranteed for life.Andrew Tully, pensions technical director at Retirement Advantage, said: “On the face of it this sounds like great news, extending the pension freedoms to existing annuity customers is a logical step. But, and this is a big but, people might not receive the sort of cash they expect once you actually do the sums. While some people may find the idea attractive, those who have been sold a poor value annuity and then trade it in won’t necessarily get better value.”This is because those purchasing the annuity will expect sellers to be medically underwritten to get a picture of how long the income stream can be expected to last. You will also need to pay income tax on your lump sum, reducing it further. As a result Retirement Advantage has calculated that sellers could see as much as 40% wiped off the value of their payout.Before considering a sale Tully said annuity holders would need to consider their current health and life expectancy, the cost of the trade – including tax, health checks, admin, profits and the cost of advice – and how they will replace their lost income if it is relied upon. Finally they will need to consider whether a lump sum would impact on their ability to claim any means-tested benefits.Find the best annuity rate for your circumstances.
So what happened to all the usual promises from the government regarding allowing us people stuck in useless annuities being able to get access to our hard earned money locked in the policies then eh ?. Yet again the government shit on us and let one pip squeak from Brighton scrap the idea this is victimisation and the government should be accountable for this and made to stand by their promises as made by George Osbourne and allow us to cash them in like the rest of the people reaching 55 years of age.