Investment - Articles - PwC comment on annuity rules extended to existing pensioners

 “Dealing with buyers regret should be welcomed. However, it is clear that there remains a place for annuities in securing at least a minimum standard of living in retirement, and the challenge for advisors, insurers and government alike will be to get this message across alongside the new proposals. 

  

 “Of course one key question is whether the pricing will be attractive to customers – once they have seen the prices they are offered will they want to sell? Although cashing-in may be attractive to many in principle it remains to be seen if this market can deliver the value pensioners are looking for.

  

 “The Budget speech on Wednesday should shed further light on how this new group of individuals will be informed about their choices. Following the reforms announced last year there are already concerns about the advice gap, the untested PensionWise service and the FCA’s new second line of defence requirements for pension providers. This new announcement will ramp up demand for the already stretched guidance/ advice services and underlines the question – will individuals have enough information to make good decisions?

  

 “With the UK pension industry moving in to uncharted territory, we expect a number of insurers will be keen to explore the annuity buy-out market and, indeed, a number have already expressed an interest. However, it will take time for companies to develop their business model and ability to offer competitive pricing before a thriving second hand annuity market develops.”