You load sixteen tons, what do you get
Another day older and deeper in debt
Saint Peter don’t you call me ’cause I can’t go
I owe my soul to the company store.
If you are retired you obviously managed to avoid a career like the one described by Tennessee Ernie Ford when he composed these lyrics. Hopefully you also had pension arrangements in place which have provided you with an income which has allowed you to maintain the standard of living you had envisaged.
If you saved while you worked, you may have used the lump sum you accumulated to buy an annuity which gives you a regular income. If you are dissatisfied with your annuity, you may be interested in changes to the rules relating to what you can do with your annuity recently introduced by HM Government. When you took out your annuity, it was for life (or a fixed term agreed at the outset). From 6 April 2017 you will be able to sell your annuity for a cash sum or for reinvestment in a drawdown scheme.
Announcing the changes, which it is estimated could affect over five million people the government set out a framework for the new arrangements.
- i) The new arrangements will apply to pension annuities belonging to an individual and held in their own name will be eligible for the new freedoms
- ii) All UK-based annuity purchasers and intermediaries will be regulated by the FCA
iii) Annuity providers will be allowed the choice to buy back an annuity, subject to robust safeguards
- iv) A comprehensive consumer protection package will be introduced to ensure people make informed decisions about their savings, including extending the free and impartial Pension Wise service to cover the secondary annuity market
Individuals will be required to seek independent financial advice for annuities worth above a certain threshold
- v) The independent regulator, the FCA, will be asked to put a consumer protection framework in place which could include consulting on a range of extra consumer protections, such as risk warnings and ways for consumers to understand.
Who is most likely to take advantage of the changes? Most obviously, it will be people who are dissatisfied with the annuity they have purchased who probably feel they could do better by investing their money elsewhere. However if the income from the annuity is uncompetitive then the cash anyone might be prepared to pay for it is unlikely to be attractive. It’s a bit like selling a car you bought new which depreciates before it has left the showroom.
In due course, you will be able to get more information on selling an annuity from Pension Advisory Service. Meanwhile you can contact them for help with
- explaining your pension options
- explaining tax
- discussing which options might be suitable for you
- giving you tips on what you can do next
Call 0300 123 1047
For information and advice on Benefits, Work, Consumer Issues, Relationships, Housing, Law and Rights, Education, Discrimination, Tax and Healthcare you can:
– call 0344 848 7969 to speak to an assessor or make an appointment to talk to an adviser face-to face. (calls to this service cost the same as calling 01 and 02 numbers included as part of a mobile allowance or a landline call package.
– visit https://www.citizensadvice.org.uk/ to access our comprehensive range of information and advice,
– visit https://casws.org.uk/ to find out what’s happening at Citizens Advice Waverley
– or follow us on Twitter @ Waverley CAB