Pensions - Articles - Allowance changes and secondary annuity market

 Lifetime Allowance

 “The lifetime allowance will be reduced to £1m (from £1.25m) from April 2016, with plans to index it from 2018. If implemented as planned, it will create another raft of different protection issues for people close to or beyond the £1m mark, introducing further complexity to the system. In practice, almost all political parties are committed to a wider review of tax relief on pensions, so this may be superseded.”

  

 Creating a secondary annuity market

 “By far the biggest announcement on pensions was confirmation that the government has launched a consultation on how a market may be established for people to trade in their future annuity income. The proposal would extend this year’s retirement freedoms to over 5m existing annuitants from April 2016. However, the consultation document provides an insight into the many complex issues involved in making this a reality; including taxation, underwriting, valuation and administration. It also raises the question of whether advice would need to be mandated, given the obvious parallels with those wishing to transfer out of DB pensions.”