Pension reform – two steps forward, one step back
19 Oct 2016
Annuity trading reforms dropped
The Government announced yesterday that it was abandoning plans to allow annuity holders to trade in their annuities for cash. Annuity trading and the removal of the need to buy an annuity with a pension fund were the two pillars of pension reform of the Coalition and previous Conservative governments. Now one of these pillars have been withdrawn.
The Government argues that annuity trading was not practical given the fact that many of the largest firms selling annuities had decided not to participate in the new trading market, fearing that they could become liable to legal action and financial redress should it be decided in the future that the prices paid for annuities were too low.
Many pensioners forced to buy annuities in the low interest environment that has existed since the Global Financial Crash will now have no means of improving their pension income. The HMRC had estimated that 300,000 annuity holders would trade in their plans.