The Treasury has revealed details of its plans to extend pension freedoms to more than five million people as part of a move to create a secondary annuity market.
Economic secretary to the Treasury Harriett Baldwin said this morning the tax restrictions will be removed from 6 April 2017, making it easier for people to sell their annuity for an upfront cash sum if they chose. It follows a recent government consultation into the introduction of a secondary annuity market.
Pension annuities belonging to an individual and held in their own name will be eligible for the new freedoms.
The measures also require that all UK-based annuity purchasers and intermediaries are regulated by the FCA. The government also plans to introduce a "comprehensive consumer protection package" to ensure people make informed decisions about their savings.
This will include extending the Pension Wise service to cover the secondary annuity market and introducing a requirement that individuals must seek independent financial advice for annuities valued above a certain threshold.
Baldwin said: "For most people, sticking with an annuity is the right thing to do. But there will be some who would welcome being able to draw on that money as they choose - the same freedom we gave people approaching retirement in April this year.
"People who've worked hard and saved hard all their lives should be trusted to make the right decision for them and with the help of the regulator we will ensure these people have the right information to do that."
The minister for pensions Baroness Altmann added: "The new pension freedom reforms are crucial in allowing people to make the most of their hard-earned savings.
"Keeping an annuity will still be the right decision for the majority of people. But some were forced to buy annuities in the past that may not have been suitable for them - and I am delighted that this reform will allow more people greater choice and the opportunity of a more flexible income stream."