A Populus survey for Saga of more than 2,000 annuity holders has revealed demand for controversial pension changes.
A quarter said they would like the option to sell their pot in exchange for a cash lump sum and a fifth said they would be likely to sell their annuity if they were given the option.
Perhaps unsurprisingly, those with smaller pots who are most likely to sell their annuity. People in lower socio economic groups are much more likely to want to sell their annuity – 29% of DEs said they were likely to, compared with 20% of ABs and 24% of C2s.
58% said that the reason they would like to sell their annuity in return for a cash lump sum is because their monthly income is too small to be able to do anything meaningful with it. A third said they would prefer to invest in an ISA or the stock market instead of their annuity.
Just 12% say they want to spend on luxuries such as cars and holidays and a generous one in ten would rather spend it on their loved ones, 8% would rather use the money for day to day spending or to pay off debt.
“It is great that the Chancellor plans to build on trusting people with their pension savings by allowing people who already have an annuity in place to obtain a lump sum,” said Saga director Paul Green.
“In our survey of over 2,000 people with an annuity a quarter said they would like the option of selling it for a lump sum.
“However, this is not a decision to be taken lightly, it will be important to get the right advice before they empty their annuity pots. We need a system to ensure people make a decision which is right for them in this complex area.
“Whilst legislation should force annuity companies to allow the resale of annuity contracts, they should also have some responsibility to make checks to protect against people being the victims of unscrupulous scams – so they may need to be able to say no or delay a sale on a case by case basis.
“As always the devil will be in the detail, we need to be sure that the end customer gets a fair price. The FCA has said that this is an area which will need complex advice – this advice will come at a cost, so where does this leave people with smaller pots who potentially are going to be the most likely to want to sell their annuity.”
