Brexit may impact appetite for secondary annuities: Altmann

Brexit may impact appetite for secondary annuities: Altmann

Following the UK’s vote to leave the European Union, the now former pensions minister Ros Altmann has said Brexit may impact the appetite for insurers to join the secondary annuity market.

Speaking to FTAdviser following this decision, she said: “We will have to see how the new landscape impacts insurers and their appetite to participate in the secondary annuity market.”

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At the end of last month, the Association of Professional Financial Advisers called for a delay on the secondary annuity market following the EU referendum.

However, the Tax Incentivised Savings Association’s pensions strategy director Adrian Boulding said the regulation required to allow the secondary annuity market to be launched is unlikely to be jettisoned because of the Brexit.

Steve Lowe, Just Retirement Partnership’s communications director, said his firm is continuing to participate in developing solutions to some of the challenges that have been put forward in the Financial Conduct Authority’s consultation on the potential market.

“We have a workshop in the next week where we are looking at solutions that deal with these challenges,” he stated. “Lots of people are thinking the government might put lots of priorities on hold, but this is a domestic policy not a European policy.”

Andrew Tully, pensions technical director at Retirement Advantage, said Brexit does not fundamentally alter his firm’s position around the market, still currently scheduled for April 2017.

“As far as Retirement Advantage being an active buyer in the market, we’ve not yet made any decision as to whether we will participate,” he said.

“While there is no doubt some customers will find the sale of their annuity an attractive idea, there are a number of practical issues which need to be sorted before this market can move forward.”

Ms Altmann also stated there was “no doubt anything that weakens the economy will impact pensions”, referring to the post-Brexit landscape. “Returns on pension savings are likely to be lower and both employers and individuals will be less able to afford good contributions.”

New prime minister Theresa May gave the pensions brief to Richard Harrington, as the parliamentary under-secretary for pensions. This is a different title to that given to Ms Altmann and her predecessor Steve Webb, who both served as the minister of state for pensions, leading some in the industry to see the move as a demotion of pensions issues.

Ms Altmann said she did not expect to see a reversal of the pension freedoms following the goverment reshuffle.

The bigger danger to pensions is a post-Brexit recession for the UK and many people losing their jobs and consequently their workplace pension.

The pensions dashboard is likely to continue to be developed, in her opinion, although she did not expect all providers to participate, as she said many do not have systems that can cope with the requirements of electronic platforms.