Prudential pulls out of open annuity market

Prudential pulls out of open annuity market

Prudential withdrew from the open annuity market on Friday (17 June).

The provider is no longer accepting applications for new external conventional annuity business from financial advisers.

Prudential will continue to provide access to conventional annuities for financial advisers with existing Prudential pension clients and for advisers’ clients holding Prudential annuity income and rate guarantees.

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Asset backed annuity business will continue to be accepted on a standard and enhanced basis from financial advisers.

A spokesperson for Prudential said in a statement: “We can confirm that we propose to make a change to conventional annuity business written with financial advisers.

“As a result of this change, from 17 June 2016, we will no longer accept applications for new external conventional annuity business only from financial advisers.

“There is no change to any of the other ways in which we offer annuity products to customers.

“We, of course, remain committed to helping advisers secure the income in retirement that is best suited to their clients’ needs, whether that is flexible income, a cash payment or a secure income.

“Our existing annuity customers who currently receive regular retirement income payments will not be affected by this decision.”

According to Hargreaves Lansdown, there are now just 10 annuity providers available on the open market.

These are Aegon, Aviva, Canada Life, Hodge Lifetime, Just Retirement, Legal & General, LV, Retirement Advantage, Scottish Widows, Standard Life.

Tom McPhail, head of retirement policy at Hargreaves Lansdown, said demand for annuities has now stabilised and has even started rising again in recent months.

He said: “However, far too many investors are still missing out on the best income for their needs because they aren’t shopping around.

“Our worry now is that with fewer annuity providers available on the market, more and more investors may end up bypassing the shopping around process and simply buying an income from their existing provider.

“Since the launch of pension freedom, more and more investors are arranging their income directly with pension providers, usually without taking advice. It is imperative therefore that everything possible is done to help them find the best possible deal.”

In May this year, statements made by the Association of British Insurers claiming annuity sales recovered in the last quarter of 2015 were been branded “incorrect” by the Tax Incentivised Savings Association’s policy strategy director.

Adrian Boulding, policy strategy director of Tisa, said the ABI’s data - which showed a considerable increase in annuity sales from its life company members - failed to take into account the full retirement product market.