From 6 April 2017 an estimated five million people will be able to sell their annuity after plans for a secondary annuities market were given the green light last month.
Annuity holders wishing to sell will be required to seek independent financial advice for annuities above a certain threshold.
But the Treasury has warned that advisers wishing to help clients in the new secondary market might be forced to take a new exam before doing so.
Keith Churchouse CFPCM Chartered MCSI, owner of Chapters Financial in Surrey, told Financial Planning Today: “I think the qualification point is probably inevitable. It might be that only qualified and authorised pension specialist can sign off annuity re-sales.
“This might be a good move in protecting against the scammers to some extent, but may be another hurdle for those who, to be fair, are a bit ‘examed out’.”
Former IFP Surrey branch chairman Mr Churchouse, who also runs the online advice firm SaidSo.co.uk, said there were a few negatives to the new market.
He said: “I am not sure how large this market will be in reality and, the likely players in this market are likely to be insurance companies who are not charities. They will only enter the market based on their profit margins and this is likely to reduce value to the end user.
“Scammers, as we have seen with the new pension freedoms, may also see this as an opportunity and I think this is an area that the Treasury could do more to protect the UK public.”
He also believes the Treasury could benefit from the new market if it can accelerate the tax take from the capital.
He said: “The devil will be in the detail, but is likely to be an ‘all or nothing’ sale of an existing annuity, which may create a large capital sum to the client/end user, which will be taxed at their standard (and probably higher rate) tax level.”
Despite his reservations, he said overall, however, that additional freedoms were a good thing and should be cautiously welcomed.
Read what other Financial Planners have made of the new market under related items.