More than 5 million people will be able to sell their annuity from 6 April 2017.
The Treasury has outlined its plans to extend pensions freedoms and create a new secondary annuity market.
From 6 April 2017, tax restrictions for people looking to sell their annuity will be removed, both for existing holders and individuals who purchase one in the future. They will now be able to sell their annuity for a cash lump sum or place their pot into drawdown.
The Treasury set out details on how the new changes will work, including:
- pension annuities belonging to an individual will be eligible for new freedoms
- all UK based annuity purchasers and intermediaries will be regulated by the FCA
- annuity providers will have the choice to buy back an annuity
- new consumer protection package will be introduced
- Pension Wise services will be extended to cover the secondary annuity market
- individuals seeking annuities worth above their threshold will be required to get financial advice
- the FCA will implement a consumer protection framework which will include consulting on a range of extra consumer protections.
The economic secretary to the Treasury Harriett Baldwin, said:
“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.
Minister for pensions Baroness Altmann, added:
“Keeping an annuity will still be the right decision for the majority of people. But some were forced to buy annuities in the past that may not have been suitable for them – and I am delighted that this reform will allow more people greater choice and the opportunity of a more flexible income stream.”