The implementation of the secondary market for annuities will be delayed until 2017, the government has announced in today’s Budget.

Following a consultation, the government has decided to delay implementation in order to ensure “there is a robust package in place to support consumers in making their decision”.

Further plans for the secondary annuities market will be announced in the autumn through the Finance Bill 2016.

Capita Employee Benefits head of marketing and research Robin Hames described the decision to allow greater time to consider and protect consumers’ interests in a new secondary annuity market as “a welcome and sensible move”.

“There is a grave danger that those who originally purchased poorly could compound their situation by then selling on their income stream in an equally ill-advised manner,” he explained.

“There are many annuitants facing a potential pensions double jeopardy, particularly those who failed to obtain an enhanced annuity when they could have done so initially, who could now be selling into a more sophisticated buyers’ market that better understands longevity risks.”

According to Partnership head of product development Mark Stopard, while the delay in implementing the secondary annuity market to 2017 may not be welcomed by some, “it will give all concerned time to build a system which is robust and provides the in-depth package of safeguards that consumers need”.

The consultation on creating a secondary annuity market was announced by the Chancellor in the last coalition Budget of March this year.

Industry response to the consultation drew attention to several issues relating to the creation of a secondary annuity market.

The National Association of Pension Funds expressed concerns at the high cost of creating such a market, which would greatly reduce the value available to annuitants.

However, NAPF director of external affairs Graham Vidler said the idea of creating a secondary market in annuities has obvious appeal. But what is far less obvious is how to create this market in any comprehensive way, without it being imbalanced or overly expensive.

“That said, we can see pockets of value for both seller and buyer – especially in the smaller annuity section of the market. We encourage the government to explore this area more fully and work with the industry and the regulator to develop a market that is fair and robust,” he added.

In addition, a recent survey by YouGov revealed British pensioners have little desire to cash in their annuity.

The survey, commissioned by the Institute and Faculty of Actuaries (IFoA), found 48 per cent of those over 55 with an annuity value the certainty their annuity gives them. Furthermore, 40 per cent believe there is a high risk they could end up worse off by cashing it in.

The main reason pensioners would consider cashing in their annuity would be because they had other pension income (10 per cent) followed closely by not wanting an annuity in the first place (9 per cent).

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