The government say you can swap your pension for cash from April 2017

15 December 2015

pensioner The pensioners among you, who bought annuities, are going to be able to swap your guaranteed income for a cash lump sum from April 2017, according to the Treasury.

The government are doing this in a bid to create a new "secondary annuity market", in addition to the pension freedoms that they first announced in 2014. From April 6th, 2017, tax restrictions for those thinking about selling their annuity, will be removed. That gives pensioners with an existing annuity the chance to sell it for cash.

If you want to that is. No-one is making you or anything.

At the moment, if you wanted to sell an annuity would face a tax of up to 70%, replaced by a tax at their 'marginal rate'. While the reduction in tax is good, it is risky selling what is basically the right to a guaranteed income.

How you'd be sure you were getting a decent price for your annuity is another headache too. Then, there's finding a buyer for it. An insurer might want to have it off you, but that's not guaranteed. And then there's the timing of the sale, which needs to be taken into considerations. Grimly, you'll have to weigh up when you think you might die. You may also have to do a medical check-up, before you get a value for it.

Seeing as your annuity payments will end when you die, rather than the buyer, this is something that people are going to have to look at.

There's a lot to think about, but, if this sounds exactly like the kind of thing you've been waiting for, then next April is the time to start making plans for.

TOPICS:   Tax   Economy

1 comment

  • warwick H.
    The old saying "beware of Greeks bearing gifts" has never been more appropriate,I wouldn't trust Cameron or Osborne as far as I could throw them, a pair of Weaseling con men who without the protection of Westminster would be in the nick for grand larceny.

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