View more on these topics

Budget 2015: Govt eyes £30k advice step for tradeable annuities

People selling their annuities may be forced to take regulated advice before swapping contracts for cash or moving into drawdown under plans unveiled by Chancellor George Osborne.

A consultation published today on how a secondary annuities market could work says “there is a strong case for requiring annuity holders to take financial advice from an independent financial adviser”.

It suggests mirroring the £30,000 mandatory advice threshold for defined benefit pension transfers.

But it warns cost could put people off seeking advice. The Government says the FCA’s “clarification of rules around simplified advice” will create a potential new market for advisers.

The Government is considering extending guidance service Pension Wise and providers’ new second line of defence requirements to include warnings about the risks of selling an annuity.

Wingate Financial Planning director Alistair Cunningham says: “Given that advising on converting DB to a DC scheme is both complex, high risk and therefore expensive, I cannot fundamentally see how an adviser could ever recommend an individual giving up their guaranteed annuity in exchange for a cash sum and it not being to the detriment of the annuitant.”

MGM Advantage pensions technical director Andrew Tully says: “While taking advice is crucial it is a further cost in the process and so further reduces the value that a customer will receive.”

Under the proposals, individuals would be required to obtain a minimum number of quotes before transacting.

Just Retirement director Stephen Lowe says: “This should be a mandatory open market where people receive the best value deal, perhaps in a way similar to the Chilean market where blind bids are presented to ensure an efficient market.”


News and expert analysis straight to your inbox

Sign up


There are 9 comments at the moment, we would love to hear your opinion too.

  1. FCA announce “only level 8 advisers can advise on this” !!!!

  2. How do you know it is worth £30,000 until you have “auctioned off” the income? You can’t know the value until you put it to the market – so at what point does the advice come in?

  3. The small print also says that you can sell your annuity income to a third party subject to the agreement of the annuity provider. Wonder how many will say yes and on what terms?

  4. Another Whitehall farce.

  5. This is all going to be very interesting…..small pots, big proportionate risks and fees which Jo Public won’t want to pay.

  6. So that’s all good for the annuity sellers…Who the heck are the purchasers going to be? The Treasury maybe, since they fancy this idea so much!

  7. Showing at FOS adjudication near you – “LIFE SETTLEMENTS 2”

  8. Jeremy Mugridge, Instinct Studios 19th March 2015 at 5:36 pm

    Whilst people are being given much more freedom to make their own decisions, in reality how informed will these decisions really be? Today’s investment information for end customers is overly complicated, static and often out of date. The regulator must now ensure that this information is sufficiently customer focused and accessible in a way that matches their evolving digital preferences – for example 35 million people in the UK own a smartphone, and they are expecting to access investment information on the go but very few investment providers are reacting to this.

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm