Annuity products have also seen a decline in sales as a result of the low interest rate climate in recent years.
But for Emma Byron, managing director of Legal & General’s individual annuities business, there are plenty of opportunities to be had in the market.
These are being driven by the massive gap in the retirement market, which is ever wider because providers have failed to find the best ways to adapt to a market still in its infancy following the announcements about the end of compulsory annuitisation.
Ms Byron said: “We still believe very much in all the growth drivers for the market, such as the ageing population, the continued move from defined benefit to defined contribution. Interest rates will not necessarily stay low forever and equity markets have become more volatile.
“All of that stuff drives annuities and when we speak to our customers they still tell us they want peace of mind and security, which often means annuity is the right answer for them.
“Annuities are not bad. Just because the chancellor said you don’t have to buy one, does not mean it is a bad thing to do. It is our job to demonstrate factually to the market that annuities are not poor value for money.”
Despite a reduction in the number of annuity providers in the market, L&G is still standing strong. For the provider it was a “considered decision” to stay.
Ms Byron added: “Back then we adopted a care and maintenance approach with the business. Obviously we knew the market would drop significantly, which is what happened.
“But we also thought, all the non-core annuity players in the market would likely leave, and therefore we would still want to compete and be a sizeable market player.
“We saw where the market settled and it is now quite an easy decision for us to say. So, we are absolutely committed to this market.”
According to Ms Byron providers need to focus more on how the products are delivered to clients rather than continually rolling out new offerings.
She explained that customers are still confused by the products they see, while the flexibility is not always there to meet the changing needs of the customer at different ages.
“What you need at 65 is likely to change when you get to 80 to 85. So we need to bring in that dimension of change over time, and then we can tell customers what products will help them meet their needs, rather than starting with products and words customers cannot engage with.