Further details on the move, which was announced in the Autumn Statement 2015, will be set out in the government’s consultation response in December this year.
Legislation will then be introduced in the Finance Bill 2017.
Stewart Hastie, partner, tax and pensions at KPMG, said: “Despite the concerns over protecting pensioners, the government is now confident it can remove the barriers to creating a secondary market for annuities. The devil will, however, be in the detail of how consumers will be safeguarded, which will be released next month.
“We can see demand for this market, but it needs to be heavily regulated in order to ensure pensioners are protected from making poor decisions.”
Tom McPhail, head of retirement policy at Hargreaves Lansdown, added: “This is a welcome development; the secondary annuity market can work well for consumers provided insurers are prevented from directly buying back their own policies as this would risk investors losing out.
“Market competition through annuity brokers, combined with appropriate consumer safeguards should ensure the market will work well, however existing annuity holders may in some cases be disappointed by the relatively low sums they are offered in return for their existing guaranteed income.”