18th Oct 2016 15:58
LONDON (Alliance News) - The UK government said Tuesday that it is not going ahead with plans to allow people to exchange their annuities for a cash sum, citing risks to consumers.
A statement from Her Majesty's Treasury said, "The government has decided not to take forward plans to introduce a secondary market in annuities in April 2017."
Economic Secretary to the Treasury, Simon Kirby, said, "allowing consumers to sell on their annuity income was always dependent on balancing the creation of an effective market with making sure consumers are properly protected. 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 that I am not prepared to do," Kirby added.
The Treasury said it was clear there would be insufficient purchasers of annuities to create a competitive market and the steps needed to create demand would undermine other consumer protections.
The secondary annuity market had been planned in order to free individuals from tax restrictions on exchanging their annuity income for cash from companies, as part of the push for greater pension freedoms.
However the plan was pushed back from its originally planned date of April this year to April 2017, amid concerns over how the market would work. Fund supermarket Hargreaves Lansdown PLC said in September it would not offer brokerage services for investors looking to sell their annuity for cash, citing concerns over risks for customers.
By Adam Clark; [email protected]
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