2. Lack of a market. According to Mr Penney: "This proposal has been mothballed due to the lack of interest from annuity providers."
3. Practical issues. He commented: "It is impossible to create a system that is cost effective and transparent, and that the consumer will understand. How do they value their pension income?"
Mr Penney added: "In principle, I can see some merit in giving an annuitant the ability to cash in their annuity with their existing provider, such as due to triviality. But this wasn't the proposal."
Andrew Pennie, head of pathways for Intelligent Pensions, said: "The secondary annuity market has failed before it even started. This is not such a bad thing and while a small number may well have been looking forward to the opportunity of selling their annuity, overall it’s probably an unnecessary distraction avoided.
“The main reason behind this decision is the risk of poor consumer outcomes; people most vulnerable and in need of ongoing income attracted by the lure of immediate cash. It was always a challenge to see how value could be achieved for an annuity seller in a market that was going to incur costs of underwriting, general administration and in all likelihood, regulated advice."
However, not all advisers were pleased to see the news. David Harrison, managing partner of True Potential, said: "This will be disappointing to thousands of people who were forced to buy an annuity, particularly at historically low rates, and now regret it.
"They are effectively locked out of the freedoms that others can enjoy. Provided that consumers were advised properly, this could have worked and a competitive market would have developed."
Mr Harrison added: "The government clearly has concerns so it’s right to shelve the proposal for now but I welcome the ongoing commitment to pensions freedoms.”
His comments echoed those made by former pensions minister Baroness Ros Altmann, who commented: "Those who bought an annuity because they were forced to do so, but would not have purchased one unless the law required it, have been waiting desperately for an opportunity to sell it but that opportunity is now being taken away from them."
