Pensions - Articles - Royal London comments on Secondary Annuity Market

 “The Treasury’s response provides welcome additional detail about how the new secondary market in annuities will work from 2017. It is good news that the Treasury has changed its mind and will allow people to sell their annuity back to their provider if they wish. The key to good consumer outcomes is that people can shop around between several potential purchasers of their annuities so that they can get the best price. Allowing original providers to buy back annuities will help with this.

 Consumer protection will be essential in this new market and we remain concerned that people on means-tested benefits will be allowed to raise capital by selling an income stream. There is a real risk of poor outcomes if people on low incomes sell their annuity only to discover that the DWP treats them as if they were still drawing that income. If the government thinks that most people would do best to retain their annuity income, it is especially important that the most vulnerable customers, including the ‘old elderly’, are given particular protection. These issues will need to be covered in the future FCA consultation.”