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Tom McPhail, head of pensions research, Hargreaves Lansdown, said: "The bird in the hand option of cashing in an annuity will be attractive to many.

"For some people, an annuity will be the right choice whereas others might want to take their whole tax-free lump sum and convert the rest to drawdown.

From 6 April, any requirement to convert a pension pot into an annuity will be abolished, leaving people free to do what they like with their retirement cash.

How can a buyer be sure that the company selling the annuity will be able to make the payments 20 or 30 years from now? Annuities can be complicated and are sometimes sold with large fees.

Anyone buying a Lamborghini instead of an annuity will be paying a lot of tax now, though they might end up on welfare after their bad eyesight lets them hit a bus with it.

Savers over the age of 55 who want to take money from their pension pot rather than buy an annuity will be given extra protection under rules set out by the City watchdog.

Those with large annuities will be required to obtain financial advice before being able to sell.

However, as things stand millions of people already locked into annuities will be unaffected by the new rules.

Any money already in the Prudential annuities will be protected at the guaranteed rate for people who eventually take annuity payments.

But such sellers will face a tax bill; this will raise another £500m in 2016-17.Creating a market for second-hand annuities will be hard.

Those who have already bought annuities will be able to sell them from 2016 and those who sell will be able to pass their pot on to their heirs.