Budget comment: BROADSTONE comments on the reduction of the Lifetime Allowance, and the secondary annuity market

18/03/2015

BROADSTONE

Commenting on the reduction of the Lifetime Allowance for tax-free pension savings from £1.25m to £1m, Simon Nicol, Pension Director at BROADSTONE, said:

“Like the gift giver who waits expectantly for reciprocation it was inevitable the Government would be looking for payback for the new pension freedoms. So even before pensioners have had a chance to play with their new toys the Government has begun the process of clawing back the benefits with a reduction in the Lifetime Allowance to £1m.”

 

Commenting on how a secondary annuity market could work in reality, Simon Nicol, Pension Director at BROADSTONE, said:

“It is pretty clear from the DWP document ‘Creating a Secondary Annuity Market’ that neither the Government nor anyone else has much idea how to actually value a second hand annuity.

“This may well mean conservative pricing from buyers and a real shot in the dark for consumers. It is all very well imposing an advice requirement, but who will be around with any experience of advising on this?

“We are already receiving calls from people wanting to sell their annuity but it is likely that the offer they receive will be smaller than they’d like. This is unlikely to be the windfall many are hoping for.”