Britain's government has abandoned a major plan that would give pensioners control over their money

George osborneStefan Rousseau – WPA Pool/Getty ImagesFormer Chancellor of the Exchequer George Osborne came up with the plan initially.

The government has scrapped landmark plans to let pensioners sell their annuities to insurance firms.

An annuity is a common element of a workplace pension. It is a financial product that people buy at the end of their working lives to provide a steady income. Around 420,000 annuities are sold every year.

The government said that only 1 in 20 would actually go through with the sale because it would be so unlikely that they would get a good deal.

The plan, which was announced in 2014 by former Chancellor of the Exchequer George Osborne, was due to be implemented in April next year.

The policy sparked debate among regulators, with the Financial Conduct Authority concluding last year that there was a “significant risk of poor outcomes for consumers” if they were to sell their annuities.

Simon Kirby, the Economic Secretary to the Treasury, said in a statement: “Allowing consumers to sell on their annuity income was always dependent on balancing the creation of an effective market with making sure consumers are properly protected. It has become clear that we cannot guarantee consumers will get good value for money in a market that is likely to be small and limited.”

“Pursuing this policy in these circumstances would put consumers at risk — this is something that I am not prepared to do,” he said.

Setting up a secondary market for annuity products would have been expensive. The Treasury said that it would have had to act as the purchaser of last resort to make sure pensioners were getting a good price for their annuities.

“While exploring this further, it has become clear that the steps that the government would need to take to create purchasing demand in the market would undermine other consumer protections,” the Treasury said in the statement.

NOW WATCH: An economist explains why Clinton’s plan to raise the minimum wage to $15 might be ‘too much, too quickly’

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.