Can I trade in my annuity to get my money back?

admin
28 July 2015

Q

I retired in 2014 and, at the time, I had to buy an annuity with my pension for £69,000. Under the new pension rules, can I get some, or all, of that money back?
From
KR, Witney

A

At the moment, the new pensions freedoms don't cover people who have already purchased an annuity. However, the government announced in the March 2015 Budget that there will be a secondhand annuity market from April 2016.

It will work something like this: you will trade the remaining income from your annuity for a cash lump sum, with the buyer making you an offer for your annuity based on a prediction of your current life expectancy minus any costs and profit.

This means that your original purchase price of £69,000 will not be included in the calculations. What you get back as a cash lump sum will also be subject to income tax.

That is the idea anyway but, as it is subject to a government consultation with industry and consumer bodies, there will probably be some changes along the way.

Andrew Tully is pensions technical director at MGM Advantage

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