Phoenix Group is to allow some of its customers to exchange their annuity for a one-off taxable lump sum.
From November, customers of Phoenix Life who have small annuities not exceeding £300 a year will be able to cash out the sum.
The new measure will apply where the calculated value of the lump sum doesn’t exceed £2,000 and started before the start of the pension freedoms reform in April 2015.
Phoenix head of retirement propositions Danny Dowd says: “We recognise that many of our customers have annuities which provide very small regular income payments.
“This scheme offers them a choice which they will unlikely have had before – to take a one-off lump sum now or continue to receive their annuity payments.”
Customers can opt into the offer from January 2018 and have six weeks to decide on the offer. There will be no changes to the policy of those customers who want to continue with their annuity.
Dowd adds: “Offering customers the option of taking a one-off lump sum is a win-win situation.
“It offers customers a greater degree of control, but also enables us to free up resources that go into administrating small annuities.”