Former chancellor George Osborne’s plans to let pensioners sell their retirement annuities has been scrapped by the new Tory Government.
Osborne’s flagship pension scheme was first unveiled back in 2014 and would have allowed pensioners to sell off their annuity for a cash lump sum.
It was initially approved during the March 2015 Budget, and later that year it was announced that the scheme would come into effect by April 2017.
However, it has now been scrapped entirely on the grounds that it would put “consumers at risk”.
The scheme would have created a secondary market for annuities and was aimed at allowing more people the freedom to choose how to invest their pension.
It would have given over-55s the option to spend their money on whatever they want or convert it into an annuity.
However, the Treasury feels that it would lure too many pensioners into risk taking and potentially making the wrong decision.
Simon Kirby, economic secretary to the Treasury, said that “it has become clear that we cannot guarantee consumers will get good value for money in a market that is likely to be small and limited”.
He added: “Pursuing this policy in these circumstances would put consumers at risk – this is something that I am not prepared to do”.
However, campaigners have accused the Government of breaking promises and leaving millions in limbo.
According to the Financial Times, of the roughly 5m people with annuities, an estimated 300,000 would have wanted to sell theirs.
Saga’s Paul Green said that the Government’s sudden U-turn will leave many pensioners feeling “sorely disappointed”.
“Thousands of people who receive minimal income from annuities they were forced to buy who would have benefited from a way to sell their annuity”, he said.
He added that it now looks as though” there will be no way for them to turn that meagre income back into a lump sum”.