Insurers’ relief as door shuts on annuities sales

INSURERS felt “a sense of relief ” today after the Government pulled the plug on a controversial plan to create a market for pensioners to sell their annuities.

The plan was stoked fears the door would be opened to another mis-selling scandal. Annuities provide an income for life, but selling threatened to give pensioners a worse deal.

UK financial giant Hargreaves Lansdown became one of the first to shun the plan last month due to fears it would hurt savers.

Head of retirement policy Tom McPhail said: “There was a high risk of customer detriment. Generally there will be a sense of relief it’s been quietly shelved. There was a concern about insurers being tarnished potentially over another mis-selling scandal.”

Insurance analyst Barrie Cornes, of broker Panmure Gordon, said most insurers had no incentive to develop the proposal because the company paying out would stay the same, even if the product was sold on. “It was never going to get off the ground and the potential for misselling was massive,” he said.

However, fears have been raised about people in bad annuity deals.

“The secondary annuity market would have provided a mechanism for them to attain better value,” Just Retirement group director Stephen Lowe said.

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