Pensions minister Steve Webb has argued people who bought annuities before the Budget should have the option of unwinding them.
Speaking at the NAPF annual conference in Liverpool yesterday, Steve Webb also said he wants to change the rules around annuities to allow people to turn them back into cash in the future if they want, but he expects annuity providers to object to the extra cost and complexity of bringing the idea to life.
Webb said he was concerned people who had already bought annuities with their pensions might feel like they had missed out on the pension freedoms announced in the Budget.
He told Money Marketing: “For any future income stream there’s a cash equivalent out there. In concept there’s no particular reason why someone who’s 75 and wants some capital shouldn’t be able to do this.
“In principle, if we had a basis for coming up with that number and people said ‘it’s not very exciting but I’d rather have £10,000 than a tenner a week for the rest of my life’, if the roof’s just fallen in or something, I need the capital now, not the income. Is that so wrong?”
But Webb predicted insurers would probably object to the plan over costs. He said: “Insurance companies are going to say: “hang on I’ve bought the assets to back this promise and now I’ve got to reverse out, there’s cost to me” – there’s a lot you’d have to think through.”
Moving forward with the idea has been ruled out before the general election but Webb said he would be “making the case within my own party”.