Retirement Advantage has confirmed today it is to stop selling annuities. This follows the recent takeover of the company by its larger competitor Canada Life
Tom McPhail: "Retirement Advantage was a relative minnow, accounting for only a few percent of annual market turnover. Given the collapse in demand for annuities since pension freedom was announced in 2014, it is hardly a surprise we have seen so many companies leave the market."
"This isn’t though a case of ‘last one out turn off the lights’; recent research by Hargreaves Lansdown indicates we may see an upsurge in annuity demand around 10 years from now as the baby-boomers move into later retirement. This in turn could tempt more providers back into the market. It is also worth noting the market share of all the providers who have quit since 2014 is only around 20%, so competition hasn’t been as adversely affected as might be supposed."
"The good news from consumers’ perspective is that the core of remaining providers offer a good range of bespoke annuity products. The absolutely critical rule is to always shop around and always confirm health details, as it can add hundreds or even thousands of pounds onto your annual income."
Retirement Advantage is now expected to focus on manufacturing and selling investment-backed retirement income products and equity release, while Canada Life continues to sell annuities.
Before pension freedom, annuity sales were running at around 350,000 a year, whereas today they have dropped to around 80,000 a year.
The following providers are still active:
- Aviva (standard and enhanced)
- Canada Life (standard and enhanced)
- Hodge Lifetime (standard rates only)
- Just (enhanced rates only)
- Legal & General (standard and enhanced)
- Scottish Widows (enhanced rates only)
The following providers have pulled out of the open market since 2014:
- Partnership (merged with Just Retirement)
- Standard Life
- Friends Life (merged with Aviva)
- Reliance Mutual
- Retirement Advantage