Citizens Advice has said plans for the second-hand annuities market must protect consumers.
The national charity was responding the Government’s announcement that people will be able to sell their annuity from 6 April 2017.
Gillian Guy, chief executive of Citizens Advice said:
“Plans for the second-hand annuities market should be progressed with caution.
“Extending pension freedoms to people who have already bought an annuity gives consumers greater control over their retirement by allowing them to sell their annuity for a cash sum. It’s important to remember that for many people, selling an annuity might not be in their best interest as they are giving up a guaranteed income for life.
“People may also face potential pitfalls such as paying a hefty tax bill, losing means-tested benefits and having to pay annuity transaction costs for a second time.
“To make sure consumers understand these risks, the Government's commitment to extend Pension Wise to people considering selling their annuity, as well as to affected family members including partners and children is a welcome step. A mandatory advice threshold will need to strike the right balance between protecting consumers without creating barriers which prevent them from exercising their pension freedoms.”