Several UK pension companies are looking into ways to allow people to cash in small annuities if they don’t feel they are getting good value from them. The Daily Mail’s “Money Mail” section has been running a campaign to get the companies to change their rules. This came as a result of a change in expected government policy last year. Many people expected that the government would change the rules to allow people to sell their annuities and create a market for “second hand” annuities. Before the “pension freedom” legislation, everyone was forced to buy an annuity when they retired, and many feel they were forced into products that did not give them good value.
Money Mail reports –
“Late last year, the Government disappointed five million retirees by cancelling plans to let them sell their annuities, which pay a regular monthly income, for lump sums… Older savers had effectively been forced to buy these deals, often at rip-off rates, to get at their money set aside for old age… The Government’s U-turn created a divide between the generations: while older savers had to continue living on small monthly incomes, younger ones were able to use new so-called pension freedom rules to withdraw their life savings in one go… Money Mail’s Unlock Our Pensions campaign called for these freedoms to be extended to people in retirement… The bosses of Prudential, Scottish Widows, Legal & General and one other major insurer, who wished to remain anonymous, say they have launched reviews to find a way to help customers cash in… Some say they need guidance from the City watchdog before they start paying out, but industry insiders warn that the Financial Conduct Authority will publish these crucial rules only if the Government issues a statement giving the green light.”