Retirement Advantage has denied that it is pulling out of the annuities market but admitted it would be scrapping its standalone annuity product.
Reports emerged yesterday that the provider will no longer sell annuities, following its recent takeover by Canada Life.
But Retirement Advantage said this was incorrect. The firm currently offers two guaranteed annuity products – a standalone annuity and one which is sold within its drawdown product, The Retirement Account.
It said that, because Canada Life has a direct equivalent to its standalone annuity, this product will be withdrawn from the market.
A spokesman for Retirement Advantage said: “We will continue to offer an annuity within our drawdown product as there are significant differences between an annuity held within a drawdown wrapper and a traditional standalone annuity.
“We have ambitious plans to develop The Retirement Account and will update advisers as we move through the year.”
The drawdown annuity will continue to be fully underwritten and offer “competitive rates, a wide range of death benefits and income escalation, with additional tax advantages and flexibility”.
Tom McPhail, head of policy at Hargreaves Lansdown, said: “Given the collapse in demand for annuities since pension freedoms were announced in 2014, it is hardly a surprise we have seen so many companies leave the market.
“Retirement Advantage was a relative minnow, accounting for only a few percent of annual market turnover.”
Before pension freedoms were introduced, around 350,000 annuities were sold each year in the UK. Today that has dropped to around 80,000 a year. The collapse in demand has seen providers including Aegon, LV=, Prudential and Standard Life exit the market.
But Mr McPhail thinks some may be tempted back into the sector in the future.
“We may see an upsurge in annuity demand around 10 years from now as the baby-boomers move into later retirement. The good news from consumers’ perspective is that the core of remaining providers offer a good range of bespoke annuity products,” he said.