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Pension Annuities - The Way Ahead

We have written before about the Government’s move to open
up the pensions market by introducing flexible drawdown and abolishing the
requirement to purchase annuities. Whilst the main beneficiaries of these
initiatives were those who were approaching retirement, there was also a need
to consider those who were already in retirement.



Accordingly, in March 2015 the Government announced that it
intended to extend pension freedoms to those who had already bought an annuity
by opening up the way for annuities to be sold on a secondary market. In order
to do so, the Government had to amend tax regulations and this they have done
with a planned implementation date of April 2017.



In preparation for these changes, the Financial Conduct
Authority (FCA) has embarked on a consultation setting out “proposed rules and
guidance that will help ensure that consumers have an appropriate degree of
protection should they decide to sell their annuity income.” The FCA
consultation, which closes on 21 June 2016, aims to address identified risks
including running out of money in retirement, value for money, financial and
other pressures to sell placed on vulnerable individuals, potential conflicts
of interest and potential fraud implications.



Proposals include a recommendation that those looking to
sell their annuities be given appropriate financial advice. Sellers will also
be recommended to shop around and specific warnings have to be provided early
in the process alongside a full charges breakdown.



If you’re
looking for pensions or investment advice, or if your situation has changed and
you may therefore need to review your existing investment portfolio, contact
Beckworth by using one of the links on our website.