Standard Life withdraws from open annuity market

Standard Life withdraws from open annuity market

Standard Life has stopped offering annuities to new customers on the open market, in what it said is a response to a dramatic drop in demand post-pension freedoms.

The life company said the decision would only affect non-Standard Life customers.

It said existing annuity holders would not be affected, and added that Standard Life pension customers would still to be able to purchase a Standard Life pensions annuity.

"We’ve decided that we would no longer offer our annuity proposition in light of the significant changes in the retirement market since the introduction of pension freedom and took the decision to close some of our annuity products," the life company said in a statement.

"As part of these changes, we will no longer offer our annuity products to open market customers."

Since pension freedoms took away the requirement to buy an annuity in April 2015, annuity sales have plummeted.

Origo revealed this week that it had seen a 77 per cent fall in transfers from pensions to annuities since that day. 

Hargreaves Lansdown stated that Standard Life's withdrawal from the open market followed that of six other providers: Friends Life, Partnership Assurance, Prudential,  and Aegon.

Tom McPhail, head of retirement policy at Hargreaves Lansdown, said Standard Life had not been an "active, competitive player" in the open annuity market for some time, accounting for just 1 per cent of annuities bought through Hargreaves' broking service.

"There is no evidence this decision is linked to the recent announcement that they are being investigated by the FCA in respect of their past annuity sales," he said. 

"It appears a combination of both commercial and regulatory pressures are driving companies to focus their energies on those markets where they can genuinely offer customers good value for money."

Despite the exodus of six providers from the open market, Mr McPhail said there was still "healthy competition" among the remaining 8 companies in the market, adding that "demand for annuities is now stabilising post pension freedom, with around 20,000 sales per quarter".