Pensions minister Steve Webb has set out plans to allow pensioners who have already bought an annuity to sell the product in return for cash.
Webb's proposals are part of his plans to allow those who have already purchased an annuity to have access to the type of flexibility which will be enjoyed by those retiring after April, when the dramatic pension reforms outlined in last year’s Budget come into force.
In October 2014 the pensions minister said he would like to ‘unwind’ annuities bought before the Budget.
At the time Webb (pictured) said this was just his personal idea and not a government policy.
While the plans are still not government policy and will not be in place by April or before the general election in May, Webb said details were being drawn up by the Department for Work and Pensions and that he was seeking cross-party agreement that the proposals would be implemented by the next government.
Under the plans a pensioner could sell their existing annuity, probably to an insurance company or pension fund. The annuity would continue to pay out income to the new holder until the death of the original policy owner. Webb hopes details of the proposals will be published before the election.
He said the proposals would require changes to laws governing the insurance industry and that the Treasury would need to decide how the sale of annuities would be taxed.
He told The Daily Telegraph he had support for the plans from retirees around the country and that several pension providers has ‘expressed considerable interest and enthusiasm’ for the idea.
‘I want to see people trusted with their own money wherever possible,’ he told the paper. ‘I have already heard from people around the country who would like to see this change made.