This Consultation Paper seeks views on our proposed new rules and guidance for the secondary annuity market, which is due to start in April 2017.
On 18 October 2016 HM Treasury announced that they were no longer taking forward plans to introduce a secondary market in annuities in April 2017. We have, therefore, withdrawn this consultation paper and can confirm that there will be no accompanying policy statement.
Why were we consulting on this?
In April 2015 the Government introduced new pension freedoms extending choices for individuals accessing their pension savings. In March 2015 the Government announced that it was consulting on extending similar freedoms to those who already had an annuity in payment. This would allow individuals to sell their annuity income, as long as their annuity provider agreed, without the tax restrictions that currently apply.
The activities involved in selling an annuity income are already regulated by the FCA within our regulation of designated investment business. The Treasury announced, on 21 April 2016, its intention to create three new dedicated regulated activities for the secondary annuity market. These are:
- buying annuity incomes
- buying back annuity incomes (by the relevant annuity providers)
- acting as a market intermediary
The proposals in this paper set out the rules we plan to apply to these new regulated activities. Our rules are designed to help provide appropriate consumer protection while promoting effective competition in the interests of the consumer, in accordance with our objectives.
Who is this paper aimed at?
This consultation will be relevant to everyone with an interest in pensions and retirement issues, including:
- providers of annuities
- providers of retirement income products and other financial services products that play a role in consumers’ retirement planning
- sponsors of occupational defined benefit and defined contribution schemes, both trust and contract based
- individuals and firms providing advice and information in this area
- distributors of financial products, in particular retirement income products
- asset management firms
- trade bodies representing financial services firms
- consumer bodies
- charities and other organisations with a particular interest in the ageing population and/or financial services more generally
- individual consumers
The changes proposed in this paper will affect consumers who hold or will hold annuities in their name, and contingent beneficiaries with an interest in such annuities. The proposals will play a key role in determining how consumers will be able to sell their annuity incomes on the secondary market.