Hargreaves Lansdown calls for annuity rate transparency
- 6th provider to shut up shop on open market annuities since pension freedom
- 8 providers remain in what is still a competitive
- Recent FCA investigation of past sales
Tom McPhail, Head of retirement policy:
"Standard have not been an active, competitive player in the open annuity market for some time; over the past year they have accounted for less than 1% of business through our open market annuity broking service. There is no evidence this decision is linked to the recent announcement that they are being investigated by the FCA in respect of their past annuity sales. It appears a combination of both commercial and regulatory pressures are driving companies to focus their energies on those markets where they can genuinely offer customers good value for money. This is now the 6th annuity provider lost to the open market since the launch of pension freedoms (see list below). The good news for consumers is there is healthy competition among the remaining 8 companies in the market and demand for annuities is now stabilising post pension freedom, with around 20,000 sales per quarter."
For investors, the key messages are:
- "Plan ahead for your retirement; you should be thinking about how and when you will start drawing on your pensions several years in advance"
- "Shop around, particularly if you are buying an annuity; your current provider may not be offering you the best terms on the market"
- "Get the best value by confirming health and lifestyle information to try and qualify for an enhanced annuity (most of our annuity clients qualify for a higher income by doing so)"
- "Make sure your income is sustainable right through your retirement"
- "Remember you can mix and match different retirement income solutions, such as using some money in drawdown as well as using some to buy an annuity"
- "You’ll need to review your arrangements regularly to make sure they stay on track"
Six providers have pulled out of the open market since the pension freedoms were announced:
- Reliance Mutual (July 2014)
- Friends Life, merger with Aviva (April 2015)
- Partnership Assurance, merger with Just Retirement (April 2016)
- Prudential, still offer in-house annuities (June 2016)
- Aegon, in-house annuities through L&G as ‘preferred annuity supplier’ (September 2016)
- Standard Life, still offer in-house annuities (November 2016)
Hargreaves Lansdown offers a whole of market annuity service through these eight providers (plus Partnership Assurance for purchased life annuities only):
- Aviva (standard and enhanced)
- Canada Life (standard and enhanced)
- Hodge Lifetime (standard)
- Just Retirement (enhanced)
- Legal & General (standard and enhanced)
- LV= (enhanced)
- Retirement Advantage (standard and enhanced)
- Scottish Widows (enhanced)
NOTES TO EDITORS
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