Secondary Annuity  

Kirby under fire from MPs for 'disgraceful' annuity u-turn

Kirby under fire from MPs for 'disgraceful' annuity u-turn

The government has been told it must apologise for its sudden decision to scrap plans for a secondary annuity market, during urgent questions on the issue in the House of Commons today (19 October).

Liberal Democrat MP Greg Mulholland described the announcement as a "huge U-turn", adding the way in which was announced - to the media rather than to parliament - was "disgraceful".

Claiming the idea was first hatched by former Coalition pensions minister Steve Webb - a Liberal Democrat - Mr Mulholland said: "It was embraced by the former chancellor and it was specifically included in the manifesto on which this government was elected.

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"And yet yesterday (18 October) afternoon the government announced, Mr Speaker, via the press and not via this house that they were scrapping the whole deal. This is a huge U-turn, announced after clear lobbying by the industry that never really subscribed to this."

He said "tens of thousands" of people were "trapped in poor value annuities" and were eager to take advantage of the secondary annuity market.

He said many people would have been planning to sell their annuity as a result of the government's policy.

"This will mean many people having to make different decisions about retirement to those to which they were being directed," he said.

He said pension freedoms were "about trusting people with their money".

"Clearly this government has decided it no longer trusts people. They owe those who have spent time and money examining their options for retirement an apology, and I hope we get one today,” he said. 

Economic secretary to HM Treasury Simon Kirby accused Mr Mulholland of being "disingenuous" in equating a secondary market with pension freedoms more generally, adding that "on balance", the interests of the consumers "trumped" the "desire to increase this extra flexibility in pensions".

Mr Kirby did not apologise for the manner in which he made the announcement the secondary annuity market was being scrapped just six months before it was supposed to start to operate.

Peter Dowd, Labour MP and shadow financial secretary to HM Treasury, also criticised the government's U-turn.

He said: "This U-turn on pensions is in the same week that the government have pushed ahead with plans for a Lifetime Isa, despite widespread cross-party concern regarding the impact of future public finances and personal retirement plans.

"The UK remains with a pension market in which the consumer is unable to make an informed choice, due to a complete lack of cost and performance data, and we believe it should be the role of the government to provide that data."

He also asked whether the decision was "another interference by the prime minister in the previous chancellor’s decisions".

The Scottish National Party supported the decision to scrap the secondary annuity market but questioned why it was not announced in parliament. 

SNP MP Ian Blackford said: "I welcome this U-turn, they’ve done today the right thing. But we also have to ask the question, why was this not brought to the house?"