In a submission to the Government, the ABI said it supports the market, which will allow annuity holders to sell their contract back to providers, but feels its implementation should not be rushed due to the “considerable challenges” of establishing a functioning market.
It said that rushing its introduction could lead to inadequate consumer protection around advice and guidance.
The ABI said clarity is currently needed around:
- how the rights of dependents and beneficiaries will be protected;
- how people will be protected from scams and fraud;
- the exact scope of the proposals; and
- whether consumers are allowed to sell their annuities back to the provider they originally bought them from.
Yvonne Braun, director of long term savings strategy at the ABI, said a secondary annuity market could extend the possibilities of April’s pension reforms but must first overcome “complex” legal, regulatory, and prudential issues.
“We want to work with the Government to help resolve these issues, but given the lessons learned from the Freedom and Choice reforms and the need for clarity in many areas, we urge the Government not to rush these proposals through for 2016,” she said.
“Allowing more time will ensure an appropriate regulatory regime can be developed to give this new market a chance to succeed.”
A consultation into second-hand annuities is currently underway.
