Second-hand annuity market – coming soon!

Jan 15, 2016 | Tony Byrne's View

Because of the change in pensions legislation, it has become obvious that there is a need for a second-hand market for pension annuities. As people have been given more freedom with their pensions, they now want this to apply to one of the most inflexible of pension options, and why not? It has been announced that a fully operational second-hand market system will come into place on 6th April 2017. This will give those who take income from an existing annuity the chance to sell it for a lump sum or to place it into drawdown. At present, if you wish to sell your annuity you face a tax charge ranging from 55% to 70%. However, in 2017 you will be charged only at your marginal rate. Whilst keeping an existing annuity will be the best course of action for many people, for some it will allow a greater freedom of choice to move away from a system they may find restrictive and unsuitable. We can never be sure that these proposals will eventually become reality, especially with the amount of pension reform we have seen recently. However, if the second-hand market is indeed introduced, it is almost certain that advice will be mandatory before any changes can be made – so let us know if you are considering this option when the time comes.

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