A recent survey by Saga has revealed that a quarter of people would like the option to sell for a lump sum, whilst a fifth said they would like to sell their annuity if they were given the option.
From a survey of 2,062 UK adults aged 50 and over with an annuity, interviewed by Populus, the results showed there is a strong appetite for people to take advantage of the proposed changes.
Saga said that people with smaller pots are ‘most likely’ to sell their annuity, and people in lower socio-economic groups are ‘much more likely’ to want to sell their annuity.
Around 29 per cent of those which are counted as NRS social grades D and E, that is semi-skilled and unskilled manual workers, as well as non-workers, said they were likely to sell their annuity, compared with 20 per cent of A and B’s, upper middle class and middle class, and 24 per cent of C2’s, or the skilled working class.
Overall, over half of those surveyed - 58 per cent - said that the reason they would like to sell their annuity in return for a cash lump sum is because their monthly income is too small to be able to do anything meaningful with it.
The survey revealed that a third said they would prefer to invest in an Isa or the stock market instead of their annuity.
Meanwhile, just 12 per cent say they want to spend it on luxuries such as cars and holidays and a total of one in ten would rather spend it on their loved ones and 8 per cent said they would rather use the money for day-to-day spending or to pay off debt.
Paul Green, Saga director, warned that selling an annuity for a lump sum is “not a decision to be taken lightly”.
He said: “It will be important to get the right advice before they empty their annuity pots. We need a system to ensure people make a decision which is right for them in this complex area.
“Whilst legislation should force annuity companies to allow the resale of annuity contracts, they should also have some responsibility to make checks to protect against people being the victims of unscrupulous scams - so they may need to be able to say no or delay a sale on a case by case basis.
“As always the devil will be in the detail, we need to be sure that the end customer gets a fair price. The FCA has said that this is an area which will need complex advice - this advice will come at a cost, so where does this leave people with smaller pots who potentially are going to be the most likely to want to sell their annuity.”