Annuity sales suspended as providers take stock

Friends Life, Prudential and Royal London have frozen current annuity applications while they contact clients to make them fully aware of the choices now available to them.

Aegon UK, Legal & General and Standard Life confirmed they were pushing ahead with confirmed business.

Aviva meanwhile suspended new business immediately after the chancellor of the exchequer made his speech but lifted the ban on Friday last week.

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Scottish Widows and Partnership also outlined “cooling off” periods to give customers time to digest George Osborne’s revamp of the system which will allow clients to withdraw as much or as little of their pension at retirement without a 55 per cent tax charge. Instead customers will pay tax on income drawn at their nominal rate.

Richard Jones, annuities director at Scottish Widows, said all annuity applications made and quotations issued since 18 February can be put on hold if customers wish to re-examine their options. The firm is now contacting customers and IFAs to alert them to the new changes.

Mr Jones said: “Our immediate priority is to help our current customers understand what these changes mean and give them time before making decisions. Our service and support teams are working very hard to do this and the changes outlined are designed to help our customers.”

LV= also confirmed that it would return funds to annuity clients who are still within their cancellation period which has now also been extended to 60 days. However Richard Rowney, life and pensions managing director at LV=, said that the transaction would only be reversed if it was judged to be “in the client’s best interest” given the freedoms announced by the chancellor.

Mr Rowney said: “Since the chancellor’s announcement we have had advisers contacting us in order to consider their clients’ options and we believe our extending cancellation period will give them time to reflect where necessary.”

Adviser view

Paul Wilson, managing director at Lancashire-based Key Retirement Solutions, said: “The early evidence we are seeing is that people are delaying decisions on annuities once the options are explained. There is a temptation though that people will cash in and give the taxman a boost when they do not need to.”