Pension provider LV= has said it is in a good position to benefit from the pension freedoms ahead of plans to launch its new retirement account.
John Perks, managing director of LV= retirement solutions, was speaking after the firm released its life and pensions trading statement for 2014.
It shows that overall sales are up by £80m compared with 2013, but there has been a sharp drop of 15 per cent in sales of annuities following last year’s Budget announcements.
Mr Perks said: “Overall, we have had a good year. On the retirement side it is well known the annuities business suffered from the impact of the Budget, but we are feeling very positive.
“We see an increase in people wanting flexible solutions and blended solutions and we think we are in a good place to offer that.
“We will launch our retirement account in April which will allow people to blend annuities and drawdown and we feel we are one of the few providers who can do that so we are feeling bullish.”
The firm’s retirement account is a new system that will allow advisers to purchase a retirement income product for their client.
LV= said it expects to see a rise in clients blending products to gain the level of income and flexibility they want in retirement and said its retirement account will allow easy quotation and purchase of multiple products together.
Despite the lack of demand in 2014, Mr Perks said the market for annuities would continue to exist in some form.
He said: “The important thing is people do want guarantees, whether they want a lifetime guarantee or not.”
Overall retirement saw a one per cent decrease in sales while protection saw an 11 per cent increase.
The biggest increase in sales at LV= was seen in savings and investments where there was a 66 per cent increase in business from 2013.
Richard Rowney, managing director for LV= life and pensions, said: “Looking at the last quarter specifically, sales in pensions and savings & investments have been particularly good, outstripping the first three quarters.
“We believe we will continue to see this change of buying habits and increasingly people will opt for flexible or blended solutions with a level of financial security that enables them to tailor their income for their personal retirement plans.”
Ben Willis, head of research at Bristol-based Whitechurch Securities, said: “Obviously there was a significant impact on several companies when the pension freedoms were announced.
“Annuities will remain the right option for a lot of people. If they are well-run companies they should have got their house in order by now – it is just a question of how they will fill that gap.
“LV= is well covered on the insurance side so that could mitigate the loss of annuity sales.”
Adviser view
Colin Rodger, managing director of Edinburgh-based Alexander Sloan Financial Planning, said: “LV= has been marketing its short-term annuities for a while, so presumably they will be mixing that with drawdown.
“Annuities may have a place, but I would think people will go for one or the other.”
