To ask Mr Chancellor of the Exchequer, what research his Department has carried out into the potential for widening of the secondary annuity market.
26 October 2016
At March Budget 2015 the government announced proposals to remove the current restrictions on selling existing annuities, and to create the conditions for a secondary market in annuities to develop. The intention was that pensioners would be able to sell the income they receive from their annuity in return for a lump sum.
The government undertook extensive consultation with industry and consumer groups to understand the conditions that would be necessary for there to be a vibrant market and to achieve good outcomes for consumers. However, it became increasingly clear that creating the conditions to allow a competitive market to emerge could not be balanced with sufficient consumer protections.
It also became clear that there would be insufficient purchasers to create a competitive market. This means there was a high risk of significant consumer detriment as consumers would be likely to get poor value for their annuity income streams and incur high costs for selling. Furthermore, the steps that the government would have needed to take to create purchasing demand in the market would have undermined important consumer protections.
In these circumstances the government concluded that it would not be in consumers’ interests to continue with this policy.