17 of existing annuity holders would consider cashing in

17% of existing annuity holders would consider ‘cashing in’

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Published: 21 Apr 2015 Updated: 03 May 2016

With the recent Budget having announced plans to consult on allowing UK retirees who have already purchased an annuity to cash-in their policy, new research commissioned by investment and financial planning group Tilney Bestinvest has revealed that a large proportion of existing annuity holders will consider selling their guaranteed incomes for a cash lump sum.

The Tilney Bestinvest survey, carried out by YouGov amongst over 1,800 GB adults who had already purchased an annuity, found that 17% of respondents agreed with the statement ‘I would personally consider selling the annuity I have already purchased for a cash lump sum’.* Of the remaining respondents, 33% said they ‘would not personally consider selling the annuity I have already purchased for a cash lump sum’, and 50% said they didn’t know.

David Smith, Financial Planning Director at Tilney Bestinvest said: “While this announcement certainly grabbed the headlines and is likely to be popular with some retirees for whom “annuities” has become an almost dirty word as a result of the depressed gilt-yields that have driven annuity rates, the practicalities of implementing the policy are far from straightforward. Indeed, those looking to receive their original annuity investment minus what they have already taken from their annuity will likely be severely disappointed for several reasons.

“It has been announced that insurance companies who currently provide annuities will not be able to enter the market, and therefore the function of selling annuities will be carried out by third party brokers. This cost, coupled with the fees involved in medical underwriting which will be required to carry out the encashment, means that the overall fees for selling an annuity are likely to be substantial. These are on top of the tax which would need to be paid when receiving the cash, payable at your highest tax rate as well as any financial advice taken.

“As it is more likely that those with smaller annuity pots will be the ones most tempted into selling them due to the low levels of income received, the combination of these costs will have a considerable impact, perhaps even prohibiting the sale.

“Cashing in your guaranteed source of retirement income is a serious financial decision, indeed even Chancellor George Osborne said that for most people, “sticking with that annuity is the right thing to do”. In the majority of cases we would argue that encashment should only be undertaken in the light of professional advice.”

For further comment, David Smith can be contacted at david.smith@tilneybestinvest.co.uk / 0191 269 9970


* All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,311 adults aged 50 or over. Fieldwork was undertaken between 25th - 27th March 2015. The survey was carried out online

Q: In the 2015 Budget, the Government announced plans to allow people to sell their annuity income for a cash lump sum. Which ONE of the following statements comes CLOSEST to your view?

  • I would personally consider selling the annuity I have already purchased for a cash lump sum


  • I would not personally consider selling the annuity I have already purchased for a cash lump sum


  • Don’t know


Base: All GB Adults 50 plus who have ever paid into a pension plan and have already purchased an annuity (1851)

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Important information

The value of investments, and the income derived from them, can go down as well as up and you can get back less than you originally invested. This press release does not constitute personal advice. If you are in doubt as to the suitability of an investment please contact one of our advisers.

It is important to consider all of your options when making decisions about your penisions, especially in light of the new pension reforms. If you are unsure of your options you should seek professional financial advice or visit Pensionwise.gov.uk

About Tilney Bestinvest

Tilney Bestinvest is a leading investment and financial planning firm that builds on a heritage of more than 150 years. We look after more than £9 billion of assets on our clients’ behalf and pride ourselves on offering the very highest levels of professional client service with transparent, competitive pricing across our entire range of solutions.

We offer a range of services for clients whether they would like to have their investments managed by us, require the support of a highly qualified adviser, prefer to make their own investment decisions or want to take more than one approach. We also have a nationwide team of expert financial planners to help clients with all aspects of financial planning, including retirement planning.

We have won numerous awards including UK Wealth Manager of the Year, Low-cost SIPP Provider of the Year and Self-select ISA Provider of the Year 2013, as voted by readers of the Financial Times and Investors Chronicle. We are pleased that our greatest source of new business is personal referrals from existing clients.

Headquartered in Mayfair, London, Tilney Bestinvest employs almost 400 staff across our network of offices, giving us full UK coverage, and we combine our award-winning research and expertise to provide a personalised service to clients whatever their investment needs.

The Tilney Bestinvest Group of Companies comprises the firms Bestinvest (Brokers) Ltd (Reg. No. 2830297), Tilney Investment Management (Reg. No. 02010520), Bestinvest (Consultants) Ltd (Reg. No. 1550116) and HW Financial Services Ltd (Reg. No. 02030706) all of which are authorised and regulated by the Financial Conduct Authority. Registered office: 6 Chesterfield Gardens, Mayfair, W1J 5BQ.

For further information, please visit: www.tilneybestinvest.co.uk


This release was previously published on Tilney Smith & Williamson prior to the launch of Evelyn Partners.