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Govt confirms advice requirement for tradeable annuities


Pensioners will be required to take “appropriate financial advice” before selling “higher value” annuities, the Government has confirmed.

In the March Budget the Treasury launched a consultation on creating a secondary annuity market by 2017.

It suggested an advice requirement to protect consumers when they give up a guaranteed income for cash.

In an announcement published today the Government confirmed it is tabling an amendment through the Bank of England and Financial Services Bill that would make advice mandatory.

However, it has not said at what level the threshold would be set.

This will be included in secondary legislation and the Government has previously indicated the £30,000 threshold used for the transfer of safeguarded benefits would be mirrored.

The Treasury will also determine what type of annuities are in scope, how the the threshold should be calculated and whether an individuals’ circumstances should be taken into account.

The response to the consultation is expected to be published within days.

Earlier today, Money Marketing revealed the Government has decided to allow private sector firms to run secondary annuity brokers.



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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 […]


Providers divided over secondary annuities roll out

Pension providers are divided over the timeline for introducing a secondary market for annuities. Last week, the ABI called on the Government to learn from the roll out of the pension freedoms and slow down the process towards introducing a secondary annuity market. It says a number of issues need clarifying and warns the Treasury […]


Medical underwriter eyes secondary annuities market

Medical underwriting specialist MorganAsh is planning to set itself up as a middle man for the secondary annuity market. It is aiming to act as a first port of call for annuitants looking to sell their policies to the highest bidder, providing medical underwriting, checks on the annuity and on spouses, as well as delivering […]


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There are 3 comments at the moment, we would love to hear your opinion too.

  1. Presumably “appropriate” means full advice, because nothing less will do, and therein will lie the first hurdle. How much would the advice charge need to be? Given the amount of work involved for the job to be done properly, compliantly and (for the adviser) safely, how could it could be anything less than £500, possibly a fair bit more.

    Even assuming that the client would not be disadvantaged, quite possibly severely, by surrendering a guaranteed income for life, the adviser must also justify what the client proposes doing with the proceeds. Merely blowing it on a new car or a round the world cruise certainly wouldn’t be considered acceptable, certainly not in the eyes of the FOS. Add to that the hefty tax charge, not to mention clients insistent on going against best advice and it’s hard to see just who might wish to get involved in this market.

    The CMC vultures are already circling….

  2. I hear that is going to give it a go, as their business model is very similar 🙂

  3. Can you just imagine the conversations regarding this particularly daft idea. I put £30K into an annuity when I was 60 and got £1,500 a year as a pension. I’ve received 5 years worth, what can I get back as a lump sum. Well, once we take into account the cost of underwriting your health, the risk premium associated with predicting how long you will live for, the purchasers profit margin, the advice cost and the tax, how does £5K sound to you (and thats probably generous). Stupid, stupid idea. Any adviser (or provider frankly) who gets involved in this nonsense will deserve the inevitable pain a few years later.

    I’m all for pensions freedoms, but this idea is imho particularly silly.

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