Late last year, the government confirmed that a new secondary annuity market would be created by April 2017. The introduction of these new freedoms to sell annuities will benefit more than five million people who own an annuity as well as anyone who purchases an annuity in the future. These proposals will extend the pension freedoms introduced last year and will be especially relevant for those who retired before April 2015 and had little choice but to purchase a pensions annuity product.
A new consultation has been published and sets out the tax framework for the secondary market for annuities. The consultation is open for comment until 15 June 2016. The suggested changes will remove the current tax constraints and provide new options for individuals to sell their annuity bought with funds from a tax relieved pension pot, in return for a taxable lump sum, or for the sale proceeds to be paid to a more flexible pension product.
It is not intended that these new tax rules will override any other contractual, legislative or other legal restrictions that prevent individuals from assigning or surrendering annuities that are not in their name.