The Treasury's decision to scrap the creation of a secondary annuities market is 'a victory for common sense', according to the pensions industry.

Commenting on yesterday's announcement, The People's Pension director of policy and market engagement Darren Philp said: "While being a superficially attractive idea the creation of a secondary annuity market was always fraught with risk and had a mis-selling scandal written all over it. We welcome the government's decision to consign this idea to the dustbin."

The majority of the industry responded in favour of the government's decision, arguing that the selling of secondary annuities would have posed greater risks for savers and have made them more vulnerable to scammers.

AJ Bell senior analyst Tom Selby said: "Pension scammers would inevitably have seized on the changes to target annuity holders. It was difficult to see a long term market where consumers would have got good value."

ABI head of retirement policy Rob Yuile agreed that the limitations of secondary annuities outweighed the benefits.

“This is the right decision for the right reasons. The industry has consistently supported the Freedom and Choice reforms, but we agree with the government that the secondary annuity market came with considerable risks for customers, including from unregulated buyers," he said.

Concerns were also raised that if the government had proceeded with the secondary annuity market, many savers may have made significant losses due to a lack of regulated financial advice.

KPMG UK pensions partner also supported the announcement stating that "many consumers would likely have missed out on getting a fair deal due to a reluctance, or inability to pay for the professional advice many of us need."

Nonetheless, former Pensions Minister Ros Altmann noted that the sudden u-turn will come as "a major disappointment to thousands of people".

"Many have been waiting anxiously for the opportunity to undo the annuity they were forced to buy and will feel let down by today's announcement that the secondary annuity market is being scrapped.

"Many will be stuck for the rest of their life with an annuity they never wanted: This was never likely to be a huge market, but for some individuals it would have been a potential lifesaver," Altmann added.

Share Story: