Plans to allow annuity holders to sell their policies on a secondary market should be revived, according to Liberal Democrat MP Stephen Lloyd.
The government rolled back its proposed second-hand market plans in October 2016 over fears a competitive market could not be created if the required consumer protections were put in place.
An estimated 37,500 annuity sellers would have been on means-tested benefits. Providers such as Hargreaves Lansdown expressed their concern over client detriment and potential misselling when they decided not to offer an annuity brokerage service.
Adviser trade body Apfa called for a delay to the reforms in the wake of the Brexit vote in 2016.
The government had already moved its initial July 2015 timetable back to 2017.
The FCA also noted the difficulties of regulating a second-hand annuity market, with some calling for mandatory guidance or advice for annuity holders.
The idea of a market remains supported by newspapers including The Daily Mail and The Express.
Liberal Democrat pensions spokesman Lloyd is the latest to take up the call to restart a market for secondary annuities, and has written to work and pensions secretary Esther McVey urging her to reconsider dropping the plans.
While he says that scammers must be stopped from taking advantage of consumers, he notes inflation remains above the yield of a 10-year government bond, to which many annuity rates are linked, so the purchasing power of annuitants’ income is being eroded.
Lloyd says: “By introducing the pension freedoms, the Liberal Democrats ensured no one would have to buy an annuity, particularly if the annuity was an inferior product to other options they had. Allowing those who had already bought annuities to sell them on the market if they so wish is the next logical step.”
Other key pension policies the Liberal Democrats have campaigned for in recent months include a ban on contingent charging for defined benefit transfers, the introduction of “pot follows member” pensions, a “cooling off period” for savers who take more than the minimum lump sum, and a payment of £15,000 to women affected by increases to their state pension age.
Some providers have attempted to solve the problem of people being stuck in small, poor value annuities since the plans were ditched, for example Phoenix, which is offering those who took out an annuity before the freedoms and with a lump sum value of under £2,000 to cash out.