Speaking to Financial Adviser, she said the way in which a platform exchange would operate could not be worked out in detail until the legislation for a secondary annuity market was in place.
Baroness Altmann said one possible model would be to have a central platform where anyone could put a bid in, which could be accessed by an intermediary that would look at the bids and decide which was the best for the individual.
She said: “You could leave it to individual financial advisers to phone round providers like they do now.
“If you have got an IFA and you have got a decent-sized pension fund, your IFA would normally help you fill in the questionnaire, so you knew what type of annuity you wanted, and then phone round the best providers for the best bid.
“That is the way the market is already working. This is just moving it onto a secondary market as well. There does need to be some way in which individuals can find out what a fair price is.”
In December, the Treasury announced that its free guidance service Pension Wise would be extended to those participating in the secondary annuity market, due to be implemented in April 2017.
The government also recently tabled an amendment for mandatory advice for those with higher value annuities through the Bank of England and Financial Services Bill.
This will compel the FCA to make rules requiring certain authorised entities to check that holders of a relevant annuity have received appropriate financial advice before they can sell their annuity.
Baroness Altmann said: “Training Pension Wise staff on the issues specific to secondary annuities is a logical next step and we will consider who funds that. We haven’t, obviously, decided whether it happens. It will all be consulted on.
“It is an exciting market, but it may be niche. It may be that not that many people want to sell their annuities, but I think it’s absolutely right to offer people the chance.”
As part of the Summer Budget, Chancellor George Osborne delayed the launch of a secondary annuity market by a year, meaning people would not be able to sell their annuity for a lump sum until 2017.
Adviser view
Tom McPhail, head of retirement policy at Hargreaves Lansdown, said there was little evidence of the supply side coming to meet the demand.
He added: “We are not seeing it at the moment. We have spoken to insurers and potential providers of capital and they are not coming out to play.
“People will only be able to sell their annuities back to the insurance companies. If no one else is bidding on the income stream then that’s not good. Finding other participants to come into the market place is critical to making it work.”
ruth.gillbe@ft.com
