Current pensioners might be able to sell their annuities for cash under new plans due to be discussed by senior government ministers on Friday.
According to the FT, if the proposals go ahead retirees would be allowed to sell their annual income contracts to insurers on secondary markets. In return, they would receive a cash lump sum.
The discussions come ahead of next week's budget, and aim to improve the situation for those who missed out on last year's reforms for new pensioners. From April 2015, anyone entering retirement will be able to take as much as they like from their pension pots as a lump sum, paying only minimal fees on withdrawals.
There are six million people in the UK who are already tied into pension contracts, and at present they are legally bound to remain in them. For this reason, it is thought that the proposals will be very popular.
“Over the past few years, annuity rates have fallen significantly, so that the amount of lifetime pension income customers received has been much lower,” said pensions expert Ros Altmann.
“Some people have been happy to buy an annuity and, if they had help to choose the right type of product and get a good rate, they may well be satisfied, however there are many, many people who would love the chance to revisit their purchase.”
Liberal Democrat pensions minister Steve Webb is one of the key political figures backing the reform. Before changes could be made, there would need to be a consultation by the Financial Conduct Authority into how resales of annuity income could be managed.