Annuities have received quite a lot of press in recent years but for all the wrong reasons. Pension providers have been criticised for offering low annuity rates (considerably lower than they were ten years ago) which can seem to be a rather poor value for money option for retirees.
Following the pensions freedom legislation changes earlier this year, the Government is considering a change in the law which would give the 5.5 million people already taking an income from their pension, the right to sell their annuities. This would provide them with the same flexibility on how they wish to spend their pension savings, as those who have not yet retired.
It is expected that insurance companies will not have access to this second-hand annuity market and so third parties would be able to buy them. These companies are likely to insist on medical underwriting and charging substantial fees for re-selling meaning annuitants could be disappointed with the amount they're offered. That said, according to research by YouGov on behalf of investment manager Tilney Bestinvest, 17% of the 1,800 surveyed would consider swapping their guaranteed income for a cash lump sum. 33% of those surveyed said that they did not plan to sell their annuity, and 50% were unsure. (source: YahooFinance UK)
We're yet to hear from the Chancellor if and when this will be introduced - which might keep us waiting until the next budget to find out more.
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