“We would be keen to have a deferred annuity product in the UK at some point but can’t say when this will be.”
Although there isn’t a demand for deferred annuities, other types of annuities remain popular among advisers and their clients.
Tim Morris, independent financial adviser at Russell & Co, said: “I still consider annuities for my clients, yet will often defer the decision due to rates being so low.
“The only ones I’ve advised recently are enhanced annuities for poor health. The annuity rate offered has been very attractive on some.
“Other than that, with rates being so low, clients can afford to draw a low rate of income from their pensions and still be better off. Even 3 per cent withdrawals could achieve this and mean the risk of running out of money is reduced.
“For this reason, I’ve not considered the hybrid annuity products that have been introduced in recent years and don’t see much demand for these deferred annuities.”
Ricky Chan, director and chartered financial planner at IFS Wealth & Pensions, said that for a deferred annuity product to work it would need to be advised on.
Mr Chan said: “It’s hard to gauge whether there is demand from clients as many wouldn’t know such a product exists in the world, how such a product could work and how it could benefit them.
“So I think this would need to be an advised product and advisers would really need to understand the benefits for it to have any real success in UK.”
But due to annuity rates reaching an all time low last month, it is not the right time to launch this kind of product, he said.
Mr Chan added: “It’s certainly not very attractive in the current environment with low annuity rates and with many retirees enjoying the recent flexibility from pensions freedom.
“However, depending on the product details, there could be a market for it as part of a robust financial plan to ‘insure’ against longevity risk – for example, a deferred annuity may kick in if a client reaches say age 80 to provide a secure and inflation linked income for however long they may live for, giving them some peace of mind.
“This could allow them to spend more freely in their more active retirement years, with the comfort that they have a sufficient safety net income once they reach a certain age.”
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