It also announced a range of incentives to save and tighter rules on tax avoidance.
For the life industry, fund managers and other financial intermediaries, the Budget has kicked off a consultation period with the Treasury to decide the future of a new secondhand annuity market in which they could have a significant influence over its shape and scope.
The industry will have its say on Government plans to prevent current annuity holders from selling their existing contracts back the original providers, on whether retail investors should be prevented from entering the market and who should be allowed to buy annuity income streams.
The Government is seeking to limit annuity providers’ ability effectively to veto any transaction or charge an unfairly high price to allow an annuity to be sold, and is canvassing opinion on how best to police the market.
The pension industry has so far cautiously welcomed the move on annuity sales, while acknowledging the challenges involved in operating a market and setting the price of an existing annuity.
“We welcome the consultation announced by George Osborne to allow those in retirement to sell their future annuity instalments to a third party in return for a lump sum,” said Tony Stenning, head of UK retail at BlackRock. “But caution must prevail. We must ensure this is workable and that retirees are adequately protected.”
Andy Thompson, head of sales at Workplace Solutions, part of the deVere Group, said: “With the new freedoms come risks. Pensioners may not get good value based on age or state of health, plus there is enormous potential for mis-selling.”
The annuity sale plans formed part of a series of changes affecting the pensions industry, including a cut in the lifetime limit for tax-free pension saving to £1m from £1.25m and a tax-free allowance for interest earned on savings accounts.
The pension cap limit alone was expected to bolster Britain’s coffers by £600m per tax year.
Meanwhile, Chancellor George Osborne announced plans to raise £3.1bn in revenues from further ‘naming and shaming’ powers for HM Revenue & Customs, a review into inheritance tax and over 20,000 accelerated payment notices.
Osborne revamped the Disclosure of Tax Avoidance Schemes (DOTAS) regime, adding powers for HMRC to identify users of undisclosed avoidance schemes and publish details about promoters and schemes, as well as increased penalties on those who fall under DOTAS requirements.
The Government also announced it had closed the Liechtenstein Disclosure Facility half a year earlier than expected to make room for a tougher facility.
