The Pension Income Choice Association (PICA) has said that the retirement business has got one step closer to a default shopping around requirement. The recent launch of fixed term annuity by Just Retirement and direct to consumer annuity service by Heath Lambert was a step in that direction, said chairman of PICA, Tom McPhail.
“It is all good news. One of the concerns around moving towards a default shopping-around system has been the question of the markets’ capacity to deliver solutions to consumers and particularly those with smaller pots”, said Mr. McPhail.
“The more we see services like this developing, the better. It reinforces the argument that we should be encouraging everybody to shop around as a matter of course because, even with people with modest pots, there is the potential to improve retirement income”, he added.
The advisory firm Heath Lambert, in alliance with Partnership, has recently launched direct to consumer online annuity service. The service is aimed at individuals with pension pot size less than £40,000 and identifies enhanced or conventional annuities. Partnership provides medical underwriting service to the buyers.
Speaking on the occasion, Stuart Grennan, director of Heath Lambert Private Clients said more than 40 percent pensioners currently qualify for enhanced annuities due to health or lifestyle reasons, by simply answering a few health related questions.
“It is remarkable that leading pension providers have effectively got away with this comfortable status-quo for so long. The majority of people at retirement in the UK do not trawl the market for the best income when converting their funds into an annuity”, he lamented.
“This is partly to do with apathy, and partly to do with the fact that it may seem a hassle to sort out: but we believe our new online click-and-buy facility, available with or without advice has the potential to transform the annuity-buying landscape in the UK”, he added.
Meanwhile Just Retirement also launched a new age fixed term annuity to take advantage of changes in the capped drawdown rules. Consumers now switch over to an enhanced annuity if they become ill during the term.
“The capped drawdown sector will emerge as the battleground for innovation. In the next few weeks Just Retirement will be demonstrating its innovation credentials with the launch of the next generation of fixed-term annuity”, said Stephen Lowe, group director of external affairs at Just Retirement.
“Timing is very important. Underwriting a customer closest to the point when their health has suffered will often lead to the best rates being attained”, he added.