Should You Sell Your Annuity?
Many people who are interested in selling their pension annuity all have the same questions and concerns. The question is should you sell your annuity? And if so what do you need to know.
Second Hand Annuity Market
In the UK, from April 2017 about five million people with existing annuity incomes will be able to sell their annuity in exchange for a taxable lump sum of cash. The reason for this is so that pension freedom is expansive for those that have already bought an annuity can access pension flexibly.
Can Everyone Sell Their Annuity?
For most people you will be able to sell your annuity as long as it is obviously owned by you and your is name on it. For those with final salary or public sector pensions, you will not be able to extend your annuity for sale.
Does It Cost Anything to Sell?
Another question people have is whether or not you will have to pay anything upfront to sell your annuity. The industry is still in the process of working out exactly how the overall market will work and if there will be charges. There is likely hood of there being significant costs involved in selling the annuity, especially as many people will be interested in this, advice will need to be given to customers. Services such as, costs for advice, health checks, admin costs to the original seller and profit margin for the buyer. With these required services, potential costs could be viable.
Who Will Buy Annuities?
Any financial organisation can purchase an annuity and can offer prices however the market will be heavy regulated due to the potential risk of fraud and scams that could occur.
There are many companies that are interested in purchasing annuities and can offer reasonable costs for your annuity.
If you receive an enhanced annuity based on ill Heath, will you receive more?
If you currently receive enhanced annuity as you’re of ill health you may question if you will receive more money. The answer is no, the buyer will request for a medical check and medical records from your GP/doctor, this will allow them to estimate how long you will live. Furthermore if your health has been getting worse since you bought your annuity this will mean you will be offered a lower amount. The income will be received for your lifetime by the buyer.
If you’re in your 80s is it worth selling?
The buyer will estimate how long you have to live based on medical checks and reports. In these cases it is unlikely you will receive cash from your annuity.
Do you need Financial Advice before You Sell?
Because of the concern with potential scams and fraud it is important to seek financial advice to ensure customers get the best value for money. Advice will need to be given prior to trading and there will be people available to do this however many advisers have stated that they won’t advice in this particular market.