Pensions  

Frustrated pensioners knocking on IFA’s doors

Frustrated pensioners knocking on IFA’s doors

Myriad headlines about the annuity resale ahead of the Budget resulted in fed-up pensioners beating a path to IFA’s doors, advisers have claimed.

Simon Nicol, pension director for London-based Broadstone, said his firm was receiving calls from people wanting to sell their annuity even before chancellor George Osborne gave his Budget speech last week.

But Mr Nicol said, having read the government’s 35-page report on how to create an annuity re-sale market, it was now “pretty clear that neither the government nor anyone else has much idea how to actually value a second-hand annuity”.

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Some industry experts who have studied the report, which was published alongside the Budget, have questioned whether an annuity resale market could ever be created, given the long list of concerns the government has raised.

Alan Higham, retirement director for Fidelity Worldwide Investment and founder of Buckinghamshire-based Retirement Angels, said the paper on annuity resale only succceeded in highlighting the fact that a minority would benefit from such a policy and for most, selling their policy would not lead to better outcomes.

He said: “The consultation document clearly sets out the huge risks involved, not only for the annuitant selling his policy but his dependants too.

“The consent of the original annuity provider will be required and it seems it would have the unfettered right to say no.”

Provider view

Martin Tilley, director of technical services at Dentons Pension Management, said the government’s report rightly highlighted that advice would be required for annuity resale and that this would likely have to be paid for by the individual.

The cost of advice for the annuity would make any sale even less attractive and he noted that “as a concept, the likelihood of a real secondary annuity market must be extremely small”.

He added: “It is also extremely likely that IFAs would not want to provide advice on the sale, as specialist knowledge would be required, and the likelihood of a positive recommendation would be slim.”