There will be changes to annuities with a view to equalising the position with regards to the pension freedoms already made to income drawdown arrangements.
From April 2016, individuals who have already purchased an annuity will be permitted to assign their annuity income to a third party in exchange for either a lump sum or an alternative retirement product, both of which will be taxed at their marginal rates. This is a significant change from the current regime whereby annuitants are effectively locked into annuity contracts for life, with no ability to change the terms of the policy.
A consultation will be published in due course regarding the most appropriate way of creating a secondary annuity market and this will provide further clarification of the process involved. It is important to remember that the guaranteed nature of annuities mean that they will remain appropriate for many individuals and giving up this lifetime income is not something which should be done without careful consideration and advice.
Date: 19th March, 2015
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