Question to the HM Treasury:

To ask Mr Chancellor of the Exchequer, what his policy is on enabling pensioners who were obliged to buy annuities to transfer their investment into alternative financial vehicles; and if he will make a statement.

In April 2015, the Government introduced the pension freedoms to give individuals greater flexibility in how they access their pension savings (from the age of 55) by removing the obligation for people to buy an annuity upon retirement. However, these flexibilities did not apply to those individuals who had already purchased an annuity.

In order to extend the flexibilities to these individuals, at the March Budget 2015 the Government announced its intention to remove the restrictions on the sale of existing annuities and to create the conditions for a secondary market in annuities to develop. The Government expected that for most people continuing to hold their annuity would be the right decision, but wanted to give people choice over how they use their money.

However, as the policy developed it became increasingly clear that consumers would have received poor value for their income streams and the conditions to allow a vibrant and competitive market to emerge, with multiple buyers and sellers of annuities, could not be created with sufficient consumer protections. In these circumstances the Government concluded that it would not be in consumers’ interests to continue with this policy. The Government announced in October 2016 that it would no longer be continuing with proposals for a secondary market in annuities.