The government should consider allowing consumers to sell their annuities on a secondary market, Liberal Democrat spokesperson for work and pensions Stephen Lloyd MP has said.
In a letter to the Secretary of State for Work and Pensions, Ester McVey, Lloyd suggested reviving the plan to allow a secondary market for annuities.
The government had previously agreed on creating a secondary market, before deciding against it in 2016.
Lloyd said: “By introducing the pension freedoms, the Liberal Democrats ensured no one would have to buy an annuity, particularly if the annuity was an inferior product to other options they had, allowing those who had already bought annuities to sell them on the market of they so wish is the next logical step.”
Inflation continues to be above the Bank of England’s 2 per cent target and the yield on the ten-year government bond, which annuity rates are generally priced against, was only 1.23 per cent, around half the rate of inflation.
The letter stated that, due to this, the income received by annuitants has less buying power now than when the product was purchased.
For the plan to go ahead, Lloyd specified that consumer rights must be protected from potential scammers and that the government should investigate on whether the creation of a secondary annuity market is feasible and report on their findings.