Jeremy Leach CEO of Managing Partners Limited comments on budget 2015 pension reforms

Jeremy Leach CEO of Managing Partners Limited comments on budget 2015 pension reforms

Jeremy Leach, Chief Executive Officer of Managing Partners Limited, which manages a number of funds that invest in insurance linked securities, has responded to the government’s decision to allow pensioners to sell the income they receive from their annuity without unwinding the original annuity contract. Around 5 million people currently hold an annuity.

“This initiative is long overdue given that interest – and therefore annuity – rates have been at all-time lows for a record time. It is a fantastic opportunity for those who bought an annuity when it was not their preferred route to seek financial alternatives that are more suitable to their circumstances, including the paying down of debt.

“Annuity sellers could get significant value but a lot will depend on age and health factors. There will be a lot of people who will not be able to achieve the value they want from selling their annuities.

“Tax treatment will need to be clarified. For example, how will the capital gain for annuitants be taxed and how will the income streams for the new beneficiaries be treated given it will be less than the price paid for some time? Regulators will also have to draft new rules to cover transferability rules.

“For many annuity sellers it will be a complicated process though and therefore there will be significantly more demand for financial advice.”

For more information on the changes, see:
https://www.gov.uk/government/news/pension-freedoms-to-be-extended-to-people-with-annuities

Categories: News, UK Pensions

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