Steve Webb, the UK Pensions Minister plans to introduce sweeping pension reform for retired workers that would give them power sell their pensions.
An estimated five million pensioners could benefit from the proposals which would allow Mr. Webb is pushing for changes that will enable pensioners to sell their annual lifetime incomes – known as “annuities” – to the highest bidder at any time after they have retired.
The radical reforms should be particularly appealing to those who have more than one pension as a result of working for several employers, and who would prefer to have money “up front” than to receive a small amount from a low-value pension each year.
Additionally, it is expected that the reforms would result in the creation of a “second hand” pensions market, as insurance firms and other companies buy up individuals’ annuities, bundle them together and sell them on in bulk.
For many people, it is the biggest financial decision they will ever make. However, in recent years annuity rates have plunged, trapping many pensioners in poor-value schemes that have destroyed the value of their lifetime savings.
The annuities market has also been criticised for exploiting people’s confusion about the complicated arrangements by hitting customers with “shocking” annual fees, and putting people off “shopping around” for the best deal when they retire.
The problem has become particularly acute after the demise of final-salary pensions in the private sector, which do not require people to buy annuities.