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

28 July 2015


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?
KR, Witney


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