The government is today tabling an amendment for mandatory advice for those with higher value annuities through the Bank of England and Financial Services Bill.
Earlier this year government announced the most fundamental changes to how people access their pensions in nearly a century. Restrictions on individuals who had worked hard and saved for their retirement were removed, giving them the freedom and choice to get the deal that was right for them.
However, people who have already bought an annuity are still effectively locked in to the old system and do not have the option to exit from these arrangements. In this government’s view, there is no reason to prevent retirees who have already purchased an annuity from selling their right to future income streams for an upfront cash sum if it is right for them.
So from 2017, the government is removing the tax restrictions on people seeking to assign their annuity income to firms wishing to purchase it. Individuals who want to will be able to take the proceeds of their assignment and save or spend them as they see fit, taxed only at their marginal rate.
It is important that people are in a position to make an informed decision and for many people keeping their annuity income will be the right decision as it provides a stable and guaranteed income. That is why the government is already making provisions in the Bank of England and Financial Services Bill to extend the free and impartial Pension Wise guidance service to those annuity holders who wish to sell their annuity income streams.