Government U-Turn on Selling Pension Annuities

The Treasury announced yesterday that it was reversing a planned change that would have allowed people to sell their pension annuity after retirement. This came amid warnings from the industry that the scheme could be “the next big mis-selling timebomb” and would “put consumers at risk”.

The Guardian reports

‘The plans were originally announced in the March 2015 budget, with [George] Osborne saying that he would be extending pension freedoms to around 5 million people who were locked into annuities they had already bought… The then chancellor said at the time that these people “should have the same freedoms” as those enjoyed by the millions who had benefited from the government’s decision to scrap the requirement to convert a pension pot into an annuity – a product that provides an income for life – and let individuals do whatever they like with their retirement cash. That measure took effect in April 2015.

Simon Kirby, the Treasury economic secretary, said: “It has become clear that we cannot guarantee consumers will get good value for money in a market that is likely to be small and limited. Pursuing this policy in these circumstances would put consumers at risk – this is something I am not prepared to do.” … Tom McPhail, head of retirement policy at investment firm Hargreaves Lansdown, said of the new announcement: “The pension freedoms were George Osborne’s baby. The secondary annuity market concept was enthusiastically supported by the two most recent pensions ministers… The fact that it has now been dropped could be indicative of a new government which is progressively shedding the legacy policies of the Cameron/Osborne era and is increasingly pursuing its own agenda.”‘