(Adds reaction, detail)
LONDON Oct 18 Britain cancelled a plan to
create a secondary market for annuities on Tuesday, dismantling
a key part of former finance minister George Osborne's drive to
give pensioners freedom to choose how to invest their pension
Last year, Osborne announced pensioners would no longer have
to buy an annuity, or an income stream for life, with their
pension savings. Instead, they would be able to buy more
flexible retirement products or take their savings in cash.
The plans involved creating a market into which pensioners
could sell their annuities, but consumer groups warned that
retirees risked squandering their savings, or falling prey to
The finance ministry agreed on Tuesday that making a
secondary market for annuities would pose risks to pensioners,
and added that it was clear there would not be enough purchasers
to create a competitive market.
"This is the right decision for the right reasons," said Rob
Yuille, head of retirement at the Association of British
Insurers. "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."
Tuesday's decision put further distance between the economic
policies of the new government under Prime Minister Theresa May,
and those of predecessor David Cameron. May's finance minister
Philip Hammond is due to outline his own fiscal plans on Nov.
"The pension freedoms were George Osborne's baby. The
secondary annuity market concept was enthusiastically supported
by the two most recent pensions ministers," said Tom McPhail,
head of retirement policy at investment firm Hargreaves
"The fact that it has now been dropped could be indicative
of a new government which is progressively shedding the legacy
policies of the Cameron/Osborne era and is increasingly pursuing
its own agenda."
(Reporting by Andy Bruce and Carolyn Cohn,; editing by William