The UK government will allow more than five million people to sell their annuity from 6 April 2017 for an upfront cash sum.
The Treasury confirmed on Tuesday that a secondary market in annuities will be introduced in April 2017, allowing those who already bought an annuity, or anyone who purchases an annuity in the future, to exchange it for an upfront cash sum.
HMRC said in a statement that the changes will “give people the freedom to use that capital as they want – just as those who reach retirement with a pension pot can do under the pension freedoms introduced in April.
Adding: “Under the new changes retirees will be able to take the annuity as a lump sum, or place it into drawdown to use the proceeds more gradually.”
The Economic Secretary to the Treasury Harriett Baldwin said:
“For most people, sticking with an 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 gave people approaching retirement in April this year.
“That’s why I’m delighted that we’re extending our landmark pension freedoms to over five million people with annuities from April 2017.
“People who’ve worked hard and saved hard all their lives should be trusted to make the right decision for them and with the help of the regulator we will ensure these people have the right information to do that.”
Minister for Pensions Baroness Altmann said:
“The new pension freedom reforms are crucial in allowing people to make the most of their hard-earned savings.
“Keeping an annuity will still be the right decision for the majority of people. But some were forced to buy annuities in the past that may not have been suitable for them – and I am delighted that this reform will allow more people greater choice and the opportunity of a more flexible income stream.”