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Budget: Govt delays secondary annuities reforms

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The Government has delayed plans to introduce a secondary annuity market amid concerns about the impact rushing the reforms could have on savers.

The reforms, which will allow people to cash in their annuity, were due to be implemented in 2016.

However, the Treasury has confirmed this deadline has now been pushed back to 2017 after insurers warned of the challenges in establishing a functioning market.

Last month the ABI said: “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.”

The Budget document says: “Following consultation, the Government has decided to delay implementation of this measure until 2017, in order to ensure there is a robust package to support consumers in making their decision.

“It will set out further plans for introducing this measure in the autumn.”

Retirement Advantage pension technical director Andrew Tully says: “This is a good move to allow more time to consider how to protect customers. There is a real danger that people could get poor outcomes from trading their annuity, so we need to take time to consider how people can get a better deal by making sure they shop around.”

Wingate Financial Planning director Alistair Cunningham says: “The whole concept of tradeable annuities is inherently flawed. Given the consultation on reforming pensions tax relief it would seem foolhardy to detract from this more relevant and significant paper.”

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