The government has announced plans to delay the secondary annuity market, meaning it will not come into effect until 2017.
In his March Budget, Chancellor of the Exchequer George Osborne launched a consultation into the proposals - which would have allowed people to sell their annuity for a lump sum from April 2016.
But today’s Budget said: “The government wants existing annuity holders to have the freedom to sell their annuity income.
“The government will set out plans for a secondary annuities market in the autumn, and agrees with respondents to the recent consultation that implementation should be delayed until 2017 to ensure there is an in-depth package to support consumers in making their decision.”
The announcement follows a range of concerns raised by industry insiders, expressing fears that the market would not be practical.
In its response to the consultation, the NAPF said selling their guaranteed income could prove expensive for annuitants because of the costs of individually underwriting each transaction.
Steven Cameron, regulatory strategy director at Aegon UK, was among those who had previously expressed concerns that it would be difficult for people to assess whether the lump sum they would be offered is a fair swap for the guaranteed income they would be giving up.
Speaking after the announcement of the delay, he said: “It’s important industry and government work together to make this safe for consumers. It’s also important to highlight this won’t be the right option for most people.
“For the market to take off, we believe Government has a key role to play in facilitating certain central services.
“On assignment, annuity providers lose contact with the annuitant and will needs to be a reliable mechanism for being told when the annuitant dies so payments can stop. We see this as best delivered through a Government agency.”
Mark Stopard, head of product development at Partnership, said: “While the delay in implementing the secondary annuity market to 2017 may not be welcomed by some, it will give all concerned time to build a system which is robust and provides the in-depth package of safeguards that consumers need.
“Making the choice to sacrifice a guaranteed income should not be made lightly or without proper assistance.”
The government has said it would consider making advice compulsory for the sale of annuities.
