Retired people could be allowed to sell their pensions for cash under plans that have been proposed by pensions minister Steve Webb.
According to a statement from the Liberal Democrats, Webb’s proposals, which could benefit around five million people, would allow pensioners to sell annuities for cash to organisations such as insurance firms.
The pension freedoms announced in last year’s Budget mean that from April savers aged 55 or over can take their retirement savings in any way they choose with 25% of the fund available as a tax-free lump sum. However, at the moment, the changes do not benefit retired pensioners who are already locked into annuities until they die.
In a statement Webb said: “The Budget freedoms for people who have yet to use their pension pot have been widely welcomed.
”But the millions of people who have already been forced to buy an annuity are so far missing out on these new freedoms.”
He added that he is working on plans to get the freedoms extended to those who are receiving an annuity but who might prefer a cash lump sum.
Dear Nicola
I’m not sure trading a life pension for a lump sum could be considered a positive move. Although I endorse freedom, the likelihood of an individual squandering a lump sum and being left without an income for the remainder of their life remains a huge reality and creates a possible extra burden on state and society.
Accuse me of paternalism if you wish but reality has shown this. People do sometimes need protection from their own bad decisions, especially when it could have a broader impact on those around them.
Best regards
Chris