Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Annuity definition

What does Annuity mean? An annuity is a legally binding arrangement under which a payer (such as an insurer, trustee, estate or other grantor) must make regular, periodic payments to a named recipient (the annuitant), usually for the annuitant’s life or for a fixed term. The term is descriptive and used across pensions, life insurance, wills and trusts, property and litigation settlements; context‑specific definitions appear in pensions and tax legislation in the UK and Ireland. Usage is broadly consistent across England & Wales, Scotland, Northern Ireland and Ireland. Key features typically specified include: duration (life, term certain, joint‑life or reversionary), start date (immediate or deferred), payment...

UK secondary annuity market proposals: scope, FCA regime, tax treatment, consumer protection and viability concerns, and the government’s October 2016 decision to cancel plans

Published by a LexisNexis Pensions expert

Practice notes

This Practice Note is archived following the government’s announcement on Tuesday 18 October 2016 to scrap plans for a secondary annuity market, on the basis that the consumer protections required would have constrained the market’s development. For details of this decision, see Decision to cancel plans for the creation of a secondary annuity market, below. As a result, pensioners who sell annuity income remain liable to an unauthorised payment tax charge of 55%—rising to 70% in some instances—where they reassign their annuity. For further guidance on unauthorised payments, see Practice Note: Authorised and unauthorised payments.

Meaning of 'secondary annuity market'

The phrase ‘secondary annuity market’ first surfaced after the March Budget 2015, when the government indicated an intention to remove limits on buying and selling existing annuities, permitting pensioners to sell annuity income to institutional investors (eg insurance companies, pension funds, asset managers and intermediaries) without unwinding the original annuity contract. Establishing such a market would have meant that, with their annuity provider’s agreement, annuitants who had bought an annuity would have been entitled to...

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Web page updated on 22/05/2026

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