Standard Life has pulled out of the annuity open market.
The announcement makes Standard Life the sixth insurer to pull out of the open market since the pension freedoms.
In a statement Standard Life said: ‘In light of the significant changes in the retirement market since the introduction of pension freedom, we took the decision to stop making our annuities available on the open market. Customers can still buy annuities from Standard Life through our external annuity panel. Our own pensions annuity is still available to existing Standard Life pension customers.’
Tom McPhail, head of retirement policy at Hargreaves Lansdown said: ‘Standard have not been an active, competitive player in the open annuity market for some time; over the past year they have accounted for less than 1% of business through our open market annuity broking service.’
Last month the Financial Conduct Authority told it to review eight years’ worth of annuities sold direct to the public
He said: ‘There is no evidence this decision is linked to the recent announcement that they are being investigated by the FCA in respect of their past annuity sales. It appears a combination of both commercial and regulatory pressures are driving companies to focus their energies on those markets where they can genuinely offer customers good value for money.’
There are still eight companies in the market. McPhail said demand for annuities was ‘stabilising’ with around 20,000 sales per quarter.
Since the freedoms came into force in April 2015 £4.2 billion was invested in annuities across 80,000 policies. The average fund size for annuities was £52,500.
According to the data for the Association of British Insurers annuity sales also fell on a quarterly basis over the first year of the freedoms, with £950 million in annuities sales recorded at the start of 2016 compared to £1.1 billion in the previous three months.
The ABI found 90,700 drawdown products have been opened since last April, with an average fund size of £67,500.
Source: City Wire