The chancellor George Osborn has announce that he plans to allow pensioners to cash in their annuities.
Before the pension reforms….
Individuals saved into a pension during their working life and so built up a pension pot.
At some point during the first years of retirement, they used the money to buy an annuity from an insurance company.
This is a transaction that occurs once, and only once.
An annuity is an annual retirement income that is paid to them for the rest of their life.
From April 2016 the proposal is to allow pensioners to swap an annuity for a fixed lump sum.
But will pensioners be able to find investments which are better than the annuity they currently have?