Providers are in talks with the Treasury over how to advance plans for a secondary annuities market.
The reforms, which will allow people to cash in their annuity, were due to be implemented in 2016. However, in the July Budget the deadline was pushed back to 2017 amid concerns about the impact of rushing the reforms onto savers.
Money Marketing understands an option under consideration is for the Association of British Insurers to develop a portal that would connect potential buyers and sellers of annuities and facilitate transactions. The aim is to protect consumers from unscrupulous firms looking to capitalise on the market.
Another option is for deals to be facilitated through brokers.
Hargreaves Lansdown head of pensions research Tom McPhail says: “There is a general consensus that there needs to be some form of intermediary acting between potential buyers and sellers. Whether that is a central portal, a Government-approved body similar to Nest or brokers like those in the individual annuity market is still up for grabs.
“The most logical outcome would be an open market facilitated by brokers, who would be subject to FCA checks.”
Just Retirement director Stephen Lowe says: “There needs to be strong consumer protection and a competitive market. We have been arguing for ‘authorised bureaux’, which would facilitate a blind bidding process.
“There has also been a suggestion that an organisation like the Money Advice Service could provide a reverse annuity calculation tool to give consumers a sense of whether they are getting good value.”
Retirement Advantage pensions technical director Andrew Tully says prudence would be needed with any such tool.
He says: “We would need to be careful that a tool did not give consumers unreasonable expectations.
“It has been suggested that advice could be mandated for those with annuities worth more than £30,000, as in the pension freedoms market. The difficulty is people will not know what their annuity is worth, so there needs to be a simple way of gauging that.”
An ABI spokeswoman says it is not currently developing a portal and it is “early days” for ideas on facilitating the secondary annuities market.