Prudential has announced it will no longer be offering annuities on the open market and will only offer its products to existing customers.
The company has cited the reason for stepping back from the market is reduced demand following the pension freedom rules which came into force in April 2015, reports City AM.
There will be no change for any customers currently with Prudential, and the company will still provide access to conventional annuities for financial advisors with existing Prudential pension clients.
The announcement raised concerns from Hargreaves Lansdown about competition in the annuity business, with only 10 providers now available on the open market.
Tom McPhail, head of retirement at Hargreaves Lansdown, commented in the
Financial Times that while demand for annuities has stabilised in recent months, many investors are missing out on the best income for their needs as 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,” he is quoted as saying in the publication.
“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.”
In August 2015, the annuities market was greatly reduced following the merger of Just Retirement and Partnership. Low interest rates have made the market particularly unattractive recently. The 10 organisations currently offering annuities on the open market are Aegon,
Aviva, Canada Life, Hodge Lifetime, Just Retirement, Legal & General, LV=, Retirement Advantage, Scottish Widows and Standard Life.
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