18 Dec U.K. to Allow Sale of Retirement Annuity but at a Price
In the United States you can sell your structured settlements and annuity settlements to private companies that specialize in such areas. The government of the United Kingdom is expected to make changes any day that could have a big effect on the options retirees will have. According to the U.K. news site Telegraph.co.uk, ministers will announce a proposal that will allow people who have bought an annuity with pension funds to sell it for a lump sum payout.
There is one stipulation, however. Reports indicate that the government will require those who wish to sell solicit mandatory financial advice to pay as much as 1,000 pounds. The concern is that they want people to be aware of exactly how much they’re getting and whether or not it will be a wise decision for their financial future.
“We want to ensure people have the right information before they take important decisions about their annuities,” a Treasury spokesman said. “That’s why we’ve already committed to extending our free and impartial guidance service, Pension Wise, to cover annuities, and why we’re introducing an advice requirement for certain people wishing to sell their annuity on the secondary annuity market.”
One of the primary reasons annuities even exist is because they offer a secure long-term investment. With annuities and life insurance payouts, you have several options, including payments for a specified period of time, or payments that will continue for as long as you or your spouse is alive.
In the U.S. the second-market of getting cash for annuity payments has become popular over recent years. In a culture of ‘more now’ people want the finds they’re entitled to earlier rather than waiting until the golden years of retirement or getting slapped with fines and penalties.
If you make a withdrawal within the first five to seven years of establishing an annuity, you typically will be hit with surrender charges of up to 7% of your investment or more. Withdrawals made from typical annuities before age 59½ are also subject to taxes and a 10% early-withdrawal penalty.
It’s unclear how the U.K. government expects to help people become financially savvy by forcing them to spend a pretty penny just to sell something they already own.