Investment - Articles - PwC comments on secondary annuity market

 “The initial excitement of those with the new option of cashing-in their existing annuities is justified – dealing with buyers regret should be encouraged where possible. However, there is the risk of disappointment when pensioners looking to sell their annuities are faced with second-hand rates which may not live up to the value consumers expect. Pensioners should also expect that buyers may want to individually underwrite each annuity they buy - meaning individual medical assessments. 

 “Although helpful from a consumer perspective and, if used wisely, will be an important tool for pensioners to obtain the right assets for post-retirement, today’s announcement will put further pressure on already stretched guidance/advice services. The statement today recognises that it may be necessary to require individuals to take advice before selling.

 “It is interesting that the Government envisages insurers may want to take part in this secondary annuity market as investors. This could lead to insurers partially hedging their own longevity exposure by investing in the longevity exposure of other insurers. However, the current proposals will not allow insurers to buy back annuities that they issued. This may be good news for annuity providers as it makes annuities more flexible and thus more attractive."