Personal Pension  

Standard Life rejects second hand annuity market

Standard Life rejects second hand annuity market

Paul Matthews, chief executive for the UK and Europe at Standard Life, has told FTAdviser the insurance giant is “not interested” in the secondary annuity market.

He said: “We are predominantly focused on the wrap platform and workplace pensions. We are more capital light. It is a no for the time being.”

Mr Matthews added the insurer is more focused on customers that wanted to save and invest, including via drawdown strategies.

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His comments follow news earlier this month that pensions minister Baroness Ros Altmann is planning a secondary annuity market platform.

Baroness Altmann said: “It is an exciting market, but it may be a niche market. It may be that not that many people want to sell their annuities, but I think it is absolutely right to offer people the chance.”

In June last year, the pensions industry expressed scepticism about the workability of a secondary annuity market, which is due to be implemented in April 2017.

A secondary annuity market would allow people who already have annuities to sell their income for a lump sum.

Many predict the secondary annuity market will generate yet another ‘insistent client’ problem for the industry.

In April last year, two major pension providers revealed that they were looking at taking part in the secondary annuity market.

At that time, LV and Legal & General were both looking into buying consumers’ annuities off them.

Matthew Harris, director of Fife-based Dalbeath Financial Planning, said he used to work for Standard Life and knew that they were “very focused” on building assets under management on the platform.

He added there was a danger with the secondary annuity market that there would be complaints from consumers who sold their annuities further down the line.

Jamie Smith-Thompson, managing director at Kent-based Portfal Financial, said Standard Life’s decision not to take part in a secondary annuity market highlights the policy is a non-starter if there are no willing buyers.

He said: “It is also a reminder that customer protection must be a high priority; sellers may be offered more money if there is a larger number of buyers competing for the income.”

He said if there are only a small number of buyers though, the offers are likely to be smaller.

Mr Smith-Thompson said: “As the majority of people are likely to be better off by keeping their existing annuity, it is going to be critical that anyone looking to sell their annuity income seeks appropriate advice and doesn’t rush into a sale.”

ruth.gillbe@ft.com