ICAEW warns pensioners about risks of secondary annuity market
The Institute of Chartered Accountants in England and Wales (ICAEW) has issued a warning to anyone thinking of selling their retirement income stream under the new changes to the laws governing the annuity market.
The government's newly-unveiled secondary annuity market might end up only being of benefit to a handful of people and could leave many more out of pocket, according to the accountants group.
Fixed income stream
The ICAEW said that the cost of implementing the new plans was likely to be high, with the creation of the secondary annuity market allowing in excess of five million current holders of an annuity to sell their fixed income stream after April next year.
The idea is that pensioners will be able to free up funds that they can then put to other uses, and is a further extension to the pension freedom rules, which came into force last April.
End up worse off
ICAEW financial planning and advice manager, John Gaskell, 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."
The government's plans to extend Pension Wise, a free service that offers guidance on the options available to them when it comes to accessing funds tied up in their pension pot, also came under fire from Gaskell.
He said that the quality of the advice given fell short and suggested that people needed "advisers with genuine expertise, and that isn’t free."