Former pensions minister Baroness Ros Altmann has said thousands of people will feel let down by the government's decision to abandon the secondary annuity market.
Yesterday (18 October) the government announced it had cancelled plans for a secondary annuity market, as it stated creating the conditions to allow a competitive market to emerge could not be balanced with sufficient consumer protections.
Baroness Altmann said this will be a "major disappointment for thousands of people".
She said: "Many have been waiting anxiously for the opportunity to undo the annuity they were forced to buy and will feel let down."
Baroness Altmann said many will be stuck for the rest of their life with an annuity they never wanted, and this was never likely to be a huge market, but for some individuals it would have been a potential lifesaver.
She said: "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."
Baroness Altmann added consumer protection was vital but that was going to be offered by financial advisers and Pension Wise.
She added being able to sell the annuity would be better for many than being stuck with a small lifetime income, with no inflation or spouse protection.
"The Treasury says that only 5 per cent of annuity holders would want sell back their annuities but this is still a huge number of people.
"Around 600,000 annuities were being sold each year and most of these products offered no protection against inflation and did not ensure a spouse would be covered."
Baroness Altmann added it is a shame that this aspect of the pension freedoms is being abandoned and the overhaul of pensions guidance seems to have undermined a potentially valuable service for people, who will now be stuck for life with an annuity they did not want to buy and may not be the most suitable product for their retirement needs.
In June this year, Adrian Boulding, pensions strategy director at the Tax Incentivised Savings Association, said the regulation required to allow the secondary annuity market to be launched was unlikely to be jettisoned because of Brexit.
The secondary annuity market was originally supposed to be launched in April 2016, but was then pushed back to April 2017.
