Osborne’s annuity scheme scrapped by Government

By Kieran Drew
In October 21, 2016
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RetirementBack in January we wrote a blog on a government proposal for a Second Hand Annuity market, and how for some it will allow a greater freedom of choice to move away from a system they may find restrictive and unsuitable. We did warn that the proposal may not materialise and with the change in leadership, Theresa May’s government has decided to scrap the idea which was due to come into effect in April 2017.

In the UK, five million people have bought annuities which give pensioners a certain, guaranteed level of income.

Under the plans, consumers would have been allowed to sell their annuity income, without tax restrictions that currently apply, as long as their annuity provider agreed.

Insurance firms willing to buy second-hand annuities and brokers who could arrange the deals would charge for their services, cutting the value of the annuity sale.

The Treasury said many firms showed they were willing to allow customers to sell their annuities, but there would not be enough buyers to create a competitive market.

All in all, this is another example of the new Prime Minister scrapping the legislative legacy of David Cameron. I wish governments would do their consultations and research first, before making big announcements and promises, only to then scrap them 12 months later! This makes me wonder what other plans or policies will be for the chopping block over the coming months? Perhaps Theresa May will use the Autumn Statement to scrap the misconceived new Residential Nil Rate Band Allowance? We will just have to wait and see…

 

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