Fiona Tait, business development manager of Royal London, has indicated the insurance giant will not participate in the annuity re-sale market that is being put forward by pensions minister Steve Webb for a post-election government to implement.
In a video interview with FTAdviser, Ms Tait said: “There is likely to be a market for it but it is unlikely to be Royal London’s market.”
Her comments come on the back of the revelation in FTAdviser sister publication the Financial Times that three major insurers, Standard Life, Aviva and Legal & General, have hinted they could seek to participate in a market they have said has “potential”.
It was Steve Webb MP who first proposed allowing legacy annuitants to cash in their lifetime income policies in light of the new freedoms to access pension cash being introduced in April.
On the subject of annuity re-sale, Ms Tait said: “We have some concerns that it might lead to some stressed situations where people are selling because they really need the immediate cash, without particular thought to the future.
“The problem is any price that came with the annuity would have to be underwritten and anybody who was therefore in bad health probably would not get a very good deal and anyone who was in very good health probably should not sell because they would want to use their annuity for longer.
“There is always a potential for scandal. I do see there is a very definite possibility for people who have very small annuities just for simplicity sake rather than taking a small amount every month it might be better to take the cash.
“I would hope we will all work together to make it as efficient as possible.”
On whether Royal London is ready for April 2015, Ms Tait said: “We will be able to offer all the Budget flexibilities through our flagship income release product.
“It is probably fair to say that we didn’t have as much to do as some other companies in respect of that product because it is already simply priced and very flexible.
“I am sure there will be new products but Royal London is not going to launch a new product because the income release product is there in terms of the flexibilities it can deliver.”
emma.hughes@ft.com
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