Ministers said the proposal would build on radical reforms announced last year, which will give savers approaching retirement the freedom to take their savings as a cash lump sum.
The Treasury said:
âWhile those retiring after 6 April 2015 will benefit from these reforms, those who retired before then and bought an annuity with funds from their defined contribution pension scheme remain effectively âlockedâ into that choice through a tax charge of up to 55 per cent (or 70 per cent in some cases) if they were to reassign their annuity. In this governmentâs view, there is no reason to prevent retirees who have already purchased an annuity from selling their right to future income streams for an upfront cash sum if it is right for them.â
However, the Treasury added that it expected most existing annuity holders would continue to hold the schemes and receive a regular income from them. Individuals can use the cash from the annuity deal as they wish or pay the proceeds into a pension drawdown account, or to buy an flexible annuity, under the plans.
Consumer groups said people who felt trapped by a poor value annuity bought under old rules, would welcome the chance to take advantage of the new pension freedoms but warned that there are risks in selling an asset underpinning prospective income.
For anyone considering any sort of major change in their retirement funding, whether from a pension, an annuity or another source, the advice remains to seek independent financial advice before making any decision.
Sources: www.ft.com; www.gov.uk/hm-treasury
