Radical plans to let pensioners shop around for better deals on annuities are binned by the Treasury
George Osborne unveiled proposals for a so-called “secondary market” for the retirement products earlier this year
RADICAL PROPOSALS to allow millions of pensioners to shop around for a better deal on their annuities have been sensationally binned by the Treasury.
George Osborne unveiled proposals for a so-called “secondary market” for the retirement products earlier this year – after making it part of his great 2015 pensions’ revolution.
But the Treasury last night said it was cancelling the idea as it was impossible to make it work.
Treasury Secretary Simon Kirby said: “It has become clear that we cannot guarantee consumers will get good value for money.”
Experts said it was a “victory for common sense” given acute fears consumers could have been ripped off as they looked to switch provider.
But they added that this fear highlighted just how difficult it is for customers to understand the annuity market.
People convert their pension pot into an annuity when they retire.
This then pays out a set amount of income until death.
Watchdogs have repeatedly slammed insurers for charging sky-high fees and failing to allow customers to switch deals.
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As well as shopping around, George Osborne wanted pensioners to be able to withdraw money from their annuities to be able to use it how they want.
Savings experts last night they feared that under reforms companies would have looked to swindle customers by offering them a “bag of money” up front to win their business – and a poor rate of return on the money that was still left in the pot.
Tom McPhail, pensions expert at fund manager Hargreaves Lansdown, said: “This will no doubt come as a disappointment to some annuity holders who were looking forward to restructuring their retirement income.
“But it is the right decision.
“There’s also perhaps an interesting political change of direction.”
The Treasury said yesterday’s change will have no impact on the former Chancellor’s other reform – allowing Brits to withdraw money from their pensions near retirement.
At the time two years ago ex-Lib Dem pensions minister Steve Webb said he would have no problem with older Brits using the freedom to use the cash on a Lamborghini if they wanted to.