Retired savers waiting to re-sell their their annuities face prohibitive costs ahead of Government plans to introduce an ‘annuity marketplace’.
Under the proposals, pensioners who have already used their pension funds to buy an “annuity”, which pays an income for life, will be able to sell their deals in return for a cash lump sum. The “second-hand” pensions market will be made available in 2017.
The Government is understood to favour a free market in which savers put their annuity contract up for sale and insurance companies bid against each other.
The customer then receives a lump sum from the highest bidder. In exchange, the insurer collects the income stream attached to the saver’s annuity. However, experts have warned that the cash offers may be lower than customers hope. The income stream stops when the customer dies – as a result, people whose health has deteriorated may receive only a paltry offer.
The cost of advice is likely to exceed £1,000 for most people, experts said.
Telegraph.co.uk
Tags: annuities, annuity, cash, pensioners
This entry was posted by John on Monday, December 14th, 2015 at 9:56 am and is filed under Pension news.
