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Unwilling advisers threaten Govt tradeable annuites plan

Advisers’ reluctance to help pensioners sell their annuities risks undermining the Government’s plans to create a second-hand market in 2016.

A Money Marketing online poll of 365 advisers reveals 80 per cent would not want to be involved with advising on the merits of selling on an annuity in exchange for cash or moving into drawdown.

Just 20 per cent of respondents said they were interested in advising in the area.

Following the Budget, the Government launched a consultation on the plan, which it said would allow around five million people access to the new freedoms, and suggested it may extend the mandatory advice step recently imposed on transfers out of defined benefit schemes.

In the document it said there was a “strong case” for advice and hinted the £30,000 limit used for transfers could be adopted as a minimum level for execution-only.

Advisers say the FCA’s recent tightening of requirements on pension transfers could lead to a dearth of suitably qualified and willing advisers, leading to thousands of DB members being left frustrated as their access to more flexible defined contribution pensions is blocked.

With advisers also appearing relucant to facilitate sales, Chancellor George Osborne’s cash for annuities plan appears in danger of coming unstuck. Experts have already warned there could be a lack of demand from potential buyers of second hand annuities, such as insurers and pension funds.


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There are 5 comments at the moment, we would love to hear your opinion too.

  1. If the govt wants greater participation get the FCA to publish clear guidelines on what is deemed permissible and based on which there can be no retrospective claims and then I for one would happily participate!

  2. Cost is likely to be a major deterrent, as any intermediary merely facilitating the encashment of an existing annuity without undertaking a full analysis of all the client’s retirement income needs would be suicidally stupid. And don’t even THINK of Exec Only or Insistent Client.

    The only possible benefit to almost any client is likely to be switching to an enhanced/ underwritten annuity if his health has gone downhill since the purchase of his existing annuity. But not cashing in to blow the SV on a world cruise or a new car.

  3. Oh Simon; I beg of you, please ! don’t ask for more rules and guidance from the FCA, that’s the whole reason we are in this sorry mess, we cant move for sodding rules and guidance

  4. I see no reason why an expert cannot give advice – in fact there may be good financial planning reasons to buy back annuities and transfer them into a flexi access drawdown

    I agree that those simply wanting cash because they are short sighted will be a problem – but I have already received enquiries from some of my old clients that suggests there are good reasons why people may want to consider a buy back

  5. @Billy Burrows – That is the key word, ” expert “. In your particular field, with your experience, you may be happy to give advice, I did not study differential calculus or quantum physics, or whatever it is you need to work out the numbers.

    An opportunity perhaps for those with the right skill sets to carve a niche, I would need to know every detail before feeling comfortable advising on what is a somewhat smoke and mirrors subject for me at the moment.

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