Pensioners who want to swap their annuities for cash or drawdown under the Coalition’s plan could find a Labour government blocking their plans, Money Marketing understands.
Chancellor George Osborne launched a consultation on creating a secondary annuity market as part of his March Budget, and claimed the reform would allow around five million people to benefit from the pension freedoms.
People taking advantage of the changes may be forced to seek financial advice first. The Government says there is a “strong case” for an advice step and hints the £30,000 threshold used for transfers out of defined benefit schemes could be extended.
The Liberal Democrats confirmed in their manifesto that it would “press ahead with plans to allow people more freedom in the use of their pension pots and to allow existing pensioners to sell their annuity”.
However, pensions experts branded the plans a “scorched earth” policy that could undermine the pensions system and warned people faced a “potential minefield” when trying to sell on their annuity to insurance companies.
Now a senior Labour source says the party is not committed to a backing the development of a second hand annuity market if it forms a government following May’s general election.
The source says: “Steve Webb conjured up this idea without doing any proper research first. At the moment, we haven’t been given enough details to say whether or not it could work.”