MONEY MATTERS by Scott Woods of Bingham-Woods Independent Financial Advisors, Spalding

Staff at Bingham-Woods Independent Financial Advisors, Spalding.  Photo by Tim Wilson.
Staff at Bingham-Woods Independent Financial Advisors, Spalding. Photo by Tim Wilson.

Government’s cash for annuities plans confirmed

The Government has confirmed it is to launch a consultation on how to extend pensions freedoms to savers who have already purchased an annuity. 
Her Majesty’s Treasury aims to allow pensioners to sell on their annuities from April 2016 when the returns can either be taken as a lump sum or placed into drawdown. 
The Government published its consultation on how to establish a market for buying and selling annuities on March 18 and has pledged to work with the Financial Conduct Authority to introduce appropriate guidance and other consumer protection measures. 
Under the plans, selling an annuity will not unwind the contract but instead, the provider would continue to pay the annuity payments for the lifetime of the annuity holder before reassigning those payments to the purchaser. 
The proposal will not give the annuity holder the right to sell their annuity back to their original provider however and the Government has said it is unlikely to allow the original annuity provider to purchase and then discontinue customer annuities. 
But the Treasury spokesman said it will also seek to consult on who should buy annuity income and does not consider it to be an appropriate investment for retail investors, citing the complexity and difficulty in determining a fair price. 
Chancellor of the Exchequer George Osborne said: “There are five million pensioners who are locked into annuities they have already bought when they should have the same freedoms as we have given everyone else. 
“For most people, sticking with that annuity is the right thing to do. 
“But there will be some who would welcome being able to draw on that money as they choose - the same freedom we are offering those approaching retirement in April this year.”

Money Matters by Scott Woods.

Money Matters by Scott Woods.