Six months away from the launch of the market for annuity re-sales, concerns are mounting that there may not actually be a market, because insurers are shying away from involvement.
April 2017 is set as the date when retirees who bought an annuity with their pension fund will be able to put it up for sale in return for a cash lump sum.
For any market to function properly there need to be willing sellers and buyers, but there is little indication that there will be enough insurance companies offering to buy back annuities
In some ways, the secondary annuities market turns everything people know about annuities upside down, argues retirement expert Billy Burrows.
When people were sold annuities they were told to declare all their health issues in order to get the highest income but when they come to sell annuities the best deals will be for those who are fit and healthy.
‘Whilst I fully support freedom and choice, I think the secondary annuity market is a step too far,’ says Burrows.
He says that a market, where a small number of household names may eventually buy back the annuities they sold in the first place, might materialise; but few companies will offer to buy back annuities on the open market.
But ‘unless action is taken, the secondary annuity market will not meet the expectations of customers and the government and the industry will end up with egg on its face.’