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| Annuity re-selling plans abandoned by government | Annuity re-selling plans abandoned by government |
| (35 minutes later) | |
| The government has abandoned plans to let pensioners raise money by selling their annuities to insurance firms. | The government has abandoned plans to let pensioners raise money by selling their annuities to insurance firms. |
| The controversial idea was first aired in the March 2015 Budget by the then Chancellor George Osborne as part of his plan for "pension freedoms". | The controversial idea was first aired in the March 2015 Budget by the then Chancellor George Osborne as part of his plan for "pension freedoms". |
| Despite deciding last December that the plan would go ahead next April, the government has changed its mind. | Despite deciding last December that the plan would go ahead next April, the government has changed its mind. |
| It admitted that too many pensioners might be lured into making the wrong decision. | It admitted that too many pensioners might be lured into making the wrong decision. |
| Acknowledging that most people would be best advised to stick with their current annuities, the Economic Secretary to the Treasury, Simon Kirby, said: "Allowing consumers to sell on their annuity income was always dependent on balancing the creation of an effective market with making sure consumers are properly protected." | Acknowledging that most people would be best advised to stick with their current annuities, the Economic Secretary to the Treasury, Simon Kirby, said: "Allowing consumers to sell on their annuity income was always dependent on balancing the creation of an effective market with making sure consumers are properly protected." |
| "It has become clear that we cannot guarantee consumers will get good value for money in a market that is likely to be small and limited. | "It has become clear that we cannot guarantee consumers will get good value for money in a market that is likely to be small and limited. |
| "Pursuing this policy in these circumstances would put consumers at risk - this is something that I am not prepared to do," he added. | "Pursuing this policy in these circumstances would put consumers at risk - this is something that I am not prepared to do," he added. |
| Bad deal | |
| The government's plan was controversial from the start. | |
| Critics pointed out that anyone among the estimated five million people with annuities who sold them would almost certainly receive a poor deal. | |
| The passing of time would mean that they would inevitably get reduced value, receiving far less than they paid. | |
| Insurance firms willing to buy second-hand annuities, and brokers willing to arrange the deals, would charge for their services, eroding the value of the annuity sale. | |
| They would also insert a margin for error in their favour, thus eating further into the value of a pensioner's annuity. | |
| Last April, the Financial Conduct Authority said that a new "secondary" market in annuities would mean a "significant risk of poor outcomes for consumers". | |
| The regulator said that annuities were "inherently difficult for consumers to value, and consumers who will be able to participate in this market will include a higher proportion of older, more vulnerable consumers". | |
| Tom McPhail, of Hargreaves Lansdown, one of the UK's biggest annuity brokers, said the government's decision was right. | |
| "After extensive research, at the beginning of September [we] announced that we would not be participating in the secondary annuity market." | |
| "The risks to the vast majority of annuity holders outweigh the benefits for the small minority who could benefit," he pointed out. |