Pen­sions cash-in block hits clas­sic in­vest­ment

Classic Car Weekly (UK) - - THIS WEEK - Tom Sey­mour

Pen­sion­ers will have to go with­out cash­ing in their an­nu­ity to in­vest in a clas­sic car as the Gov­ern­ment has scrapped plans to al­low the prac­tice.

A Life An­nu­ity is a re­tire­ment in­come plan that can be bought with sav­ings, in­vest­ments, in­her­i­tance or with a taxfree cash lump sum from a pen­sion fund.

The con­ver­sion of a pen­sion in­come into an an­nu­ity used to be com­pul­sory by the age of 75 un­til new leg­is­la­tion was in­tro­duced in April 2011.

The ‘sec­ondary an­nu­ity mar­ket’ was due to start in April 2017, giv­ing pen­sion­ers locked into low pay-out rates the chance to es­cape their poli­cies and raise cash to in­vest else­where, like clas­sic cars. How­ever, the Trea­sury has now said it is too risky due to lack of com­pe­ti­tion in the in­surance mar­ket to buy and sell the an­nu­ities.

Si­mon Kirby, the eco­nomic sec­re­tary to the Trea­sury, says: ‘It has be­come clear that we can­not guar­an­tee con­sumers will get good value for money in a mar­ket that is likely to be small and lim­ited.’

Ar­wel Richards, Sil­ver­stone Auc­tions clas­sic car spe­cial­ist, says: ‘A num­ber of cars at each sale form part of a ven­dor’s pen­sion and re­tire­ment plan. A Jaguar E-type com­ing from long-term ownership will nat­u­rally en­ter the mar­ket be­cause the owner has reached the point where main­tain­ing and get­ting in and out of it has be­come a chore.

‘Nat­u­rally the val­ues have risen and the ven­dor ex­pects a healthy sum to be achieved at auc­tion for the car.’

Richards says there had been no marked uptick in in­vest­ment from new buy­ers due to the an­nu­ity an­nounce­ment. He adds: ‘ The last thing the 2016 clas­sic car mar­ket needs is scores of mis­in­formed buy­ers en­ter­ing the sec­tor hop­ing to see a profit on a clas­sic car pur­chase.

‘ This, by and large, hasn’t hap­pened. We do have buy­ers who treat their cars as part of an in­vest­ment port­fo­lio but we would pre­fer, first and fore­most, to sell cars for, and to, true clas­sic en­thu­si­asts.’

Pen­sion­ers like Anne and Bev Git­tins, pic­tured in their Tri­umph Vitesse, will no longer be able to cash in their an­nu­ity to in­vest in a clas­sic.

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