The Association of British Insurers is calling on the Government to learn from the rollout of the pension freedoms and slow down the progression towards introducing a secondary annuity market.
It says a number of issues need clarifying and warns the Treasury should “not rush towards” the proposed April 2016 start date when people will be able to sell on their annuities.
As part of its submission to the Government’s consultation, which closed on 8 June, the trade body says it supports the reforms in principle but “urges for the consultation not to be rushed”.
ABI director of long-term savings strategy Yvonne Braun says: “The Government’s proposals to create a secondary annuity market will potentially extend the freedom and choice reforms, and we want them to work for customers. Naturally there are considerable challenges in establishing a functioning market, and many unresolved complex legal, regulatory and prudential questions.
“We want to work with Government to help resolve these issues, but given the lessons learned from the freedom and choice reforms and the need for clarity in many areas, we urge the Government not to rush these proposals through for 2016. Allowing more time will ensure an appropriate regulatory regime can be developed to give this new market a chance to succeed.”
It says clarity is needed around issues such as whether providers will be allowed, but not compelled, to buy back their own annuities and how dependents and beneficiaries will be protected.
Earlier this month, Money Marketing revealed how the Government plans to reverse its initial decision to block providers from buying back their own annuities and introduce a ‘blind bidding’ process delivered by central exchanges.
But some are concerned policymakers should be focusing its resources on implementing the pension freedoms, and that fundamental flaws remain unaddressed.