LV is the next big insurance name to flee the enhanced annuity market with immediate effect.
With annuity rates plummeting as the lower-for-longer interest rate environment persists, the announcement follows the earlier news that the insurer was reviewing its annuity operations.
“The writing was on the wall,” said Hargreaves Lansdown’s pensions guru Tom McPhail.
Unfortunately the combination of the pension freedoms, monetary policy and the capital reserving requirements imposed on insurance companies have driven up the cost of buying a secure income for life through an annuity.
We would like to see policy-makers in government working with regulators and the industry to look at ways to address this problem.
Earlier this month, Standard Life, who had not been an active player in the annuities market for some time, became the sixth provider to shut up shop since former chancellor George Osborne announced his wide-sweeping push for greater pensions freedoms.
Britain’s external annuity exits
| Company | Closure date |
|---|---|
| Reliance Mutual | July 2014 |
| Friends Life (due to Aviva merger) | April 2015 |
| Partnership Assurance (due to Just Retirement merger) | April 2016 |
| Prudential | June 2016 |
| Aegon | September 2016 |
| Standard Life | November 2016 |
| LV | November 2016 |
Source: City A.M.