October 29, 2016
The former Chancellor George Osborne’s plan to allow pensioners to swap annuities for a cash lump sum is being reversed, it has been announced recently.
The change, which would have come into effect in April 2017, has now been scrapped, because there would be insufficient consumer protection from the market that it would create, according to the Treasury. The Treasury’s economic secretary, Simon Kirby, explained that there was no guarantee that consumers would see good value for their money.
While some point to the U-turn as yet another sign of the new government removing the legacies of Cameron and Osborne, the pensions industry is breathing a sigh of relief. Close Brothers Asset Management warned that Osborne’s plans could have ended up being the next financial mis-selling scandal, and AJ Bell had voiced concern that the secondary market for annuities would favour buyers rather than sellers. However, specialists in over-50s living, SAGA, found that over half of those wanting to sell their annuity were getting such a small income from it, that there was little that they could realistically do with it.
Although Osborne had stated that most people would be better off keeping their annuity, he recognised that there would be some who would welcome the chance to sell it for a lump sum, if they needed to pay off debts, for example. While some pensioners will feel that with this reversal, the rug has been pulled from under their feet, the fears from the industry are real. Without consumer protection, their money could have been eaten into by hefty charges, and even worse, annuity holders could fall victim to scammers.
For those who had been hoping to swap their annuities for cash in order to pay off debt, they will need to look for alternative methods of reducing their liabilities. Fortunately, there is a range of solutions available, from simply reorganising day-to-day and month-to-month finances, through debt consolidation, IVA, and at the other end of the scale, bankruptcy. That’s where debt management speciallists like https://www.carringtondean.com/individual-voluntary-arrangement-iva/ are able to help.
Debt management experts can help put financial worries into perspective. Often, just a few simple tweaks to the regular outgoings and bills can make a big difference. Even if not, they’re there to help find the best solution to bring personal finances under control.