Four of the largest life companies have suspended the processing of annuity applications while they communicate to customers the changes wrought by chancellor George Osborne in this year’s Budget.
Aviva, Friends Life, Prudential and Royal London have put a freeze on all current annuities applications in order to communicate with clients to see if they still want to push ahead with the annuity purchase.
Royal London, whose annuities are offered to internal customers and written by Prudential, confirmed its freeze includes not processing applications.
A spokesperson told FTAdviser applications would be on hold for an unknown period of time while it assesses its position and gives clients the option to review their situation, but that it would likely be a matter of days.
Aviva said it has just lifted a new business freeze that it had put in place on Wednesday.
A spokesperson for Aviva said: “We are now processing new business applications and quotations for annuity applications where funds are coming from other providers, and have removed the ‘breathing space’ we put in place immediately after the Budget changes were announced. For our maturing pension customers the ‘breathing space’ remains in place to give customers time to consider their options and for us to contact them.
“We are contacting advisers and customers to discuss whether their applications are still appropriate to go ahead.”
A spokesperson for Royal London said: “Royal London is holding off from processing annuities and are currently looking at how we go about communicating the changes to customers.
“The reason for things to be held off is to tell customers what’s happening and give them all the options.”
With regards to those due paperwork now, the spokesperson said: “Somebody due for one of those retirement forms today will not get it. We aren’t going to issue further paperwork to customers until we can amend it to include the new information. We need to make sure all customers are properly informed.”
The news follows on from the announcement by LV that it was extending the cancellation period from 30 days to 60 and will return funds to advised clients where it is ‘in their interest’.
Specialist annuity provider Partnership has also announced it is extending its annuity guarantee and cooling-off period to give customers who are currently annuitising an opportunity to review their decision.
With immediate effect, Partnership will extend the guarantee period for accepting any annuity quotations currently within their guarantee period up to 11 April 2014. Customers will then have up to 25 April for funds to arrive within the guarantee period.
Partnership has also extended the cooling off period up to 11 April 2014 for any acceptances received from the 3rd March 2014.
Aegon, Legal and General and Standard Life have all confirmed to FTAdviser they are not suspending annuities business.
On Wednesday, chancellor George Osborne announced a radical shake-up of the at-retirement market.
Among the changes to the way people fund their retirement, the government will consult on plans to allow pensioners to access all of their fund with no limits, with only a marginal rate tax charge on funds above the 25 per cent tax-free lump sum.