21st June 2016
The Prudential has withdrawn from the open market for annuities and in future will only offer them to existing customers. With the recent merger of Just Retirement and Partnership, the number of annuity providers on the open market is falling significantly.
Tom McPhail, Head of Retirement Policy, Hargreaves Lansdown: “Demand for annuities has now stabilised, and has even started rising again in recent months. 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.”
Recent research from Citizens Advice showed that 7 in 10 investors are not shopping around when sorting out their retirement income.
Previously the FCA had found that 80% of annuity investors could benefit from shopping around at retirement.
Based on data from the Hargreaves Lansdown annuity broking service, the average difference between the best and worst rates on the open market in May 2016 was 22.1%.
Annuity providers now available on the open market (source Hargreaves Lansdown)