The secondary annuity market [Archived]
The secondary annuity market [Archived]

The following Pensions practice note provides comprehensive and up to date legal information covering:

  • The secondary annuity market [Archived]
  • Meaning of 'secondary annuity market'
  • Proposed timeline for implementation
  • The government's proposals in detail
  • Ways of using annuity proceeds
  • Application of the money purchase annual allowance
  • Treatment on death
  • Types of annuity capable of being sold on the secondary annuity market
  • Types of purchasers or investors in the secondary annuity market
  • No partial assignment
  • More...

This Practice Note has been archived because on Tuesday 18 October 2016, the government announced its decision to cancel plans for the creation of a secondary annuity market on the grounds that the need for consumer protections would have restricted the development of such a market. For more information on this decision, see Decision to cancel plans for the creation of a secondary annuity market, below.

This means that pensioners who sell their annuity income will remain subject to an unauthorised payment tax charge of 55% (increasing to 70% in some cases) if they reassign their annuity. For more information on unauthorised payments, see Practice Note: Authorised and unauthorised payments.

Meaning of 'secondary annuity market'

The term 'secondary annuity market' first appeared following the March Budget 2015 when the government announced that it intended to remove the restrictions on buying and selling existing annuities to allow pensioners to sell their annuity income to institutional investors (eg insurance companies, pension funds, asset managers and intermediaries) without unwinding the original annuity contract.

The creation of a secondary annuity market would have meant that, subject to the agreement of their annuity provider, annuitants who had bought an annuity would have had the right to assign their annuity contract to a third-party investor in return for a capital lump sum. Meanwhile, the annuity provider would have continued to retain the assets supporting

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