This is a great opportunity for those stuck with an annuity that does not meet their income needs.
Despite the recent pension freedoms, many people may still want to purchase an annuity to provide some certainty for a portion of their retirement income needs, say to cover recurring fixed costs for the first 10 years in retirement or to cover care costs from a defined age.
However, the annuity market is large with many providers and many different annuities on offer. So before individuals look to cash in existing annuities, they need to check their income needs, see whether they need an annuity and what type and then shop around to find the best one for their particular needs and circumstances.
The government has confirmed that the secondary annuity market will not extend to defined benefit (DB) workplace pension schemes. From 6 April 2017, the government will remove tax restrictions for individuals looking to sell their annuity. This will enable those with an existing annuity, as well as anyone who purchases an annuity in the future, to sell their annuity for an upfront cash lump sum or to place it into drawdown. Only annuities belonging to an individual and held in their own name will be eligible for the new freedoms.