The government's newly-unveiled secondary annuity market may only benefit a handful of people and could leave many pensioners worse off, an industry body for accountants has warned today.
The Institute of Chartered Accountants in England and Wales (ICAEW) also cautioned that the plans, which were announced by the Treasury yesterday, were likely to be expensive to implement.
John Gaskell, ICAEW financial planning and advice manager, said:
This may look like it allows people to do what they like with their own money, but the reality is it will be complicated, expensive to get right, and is unlikely to benefit that many people. A more likely result is that the consumer will end up worse off.
Gaskell also pointed out the government's plans to extend Pension Wise, which is a free service offering people guidance on the options they have for accessing their pension, to those looking to sell their annuity, fell short, pointing out that what people needed was "advisers with genuine expertise, and that isn’t free".
The secondary annuity market will allow more than five million people who currently hold an annuity to sell their fixed income stream in return for a cash lump sum from April 2017.
The new plans are designed to extend the pension freedom rules, which came into force this April and allow people aged over 55 to access their pension pot without first buying an annuity, to those who had already purchased an annuity.