Annuities sales plummet after annuity rule change

News


30 Apr, 2014

Annuities sales plummet after annuity rule change

The budget changes in rules about annuities were extraordinary news... but not for everyone. The decision to scrap the rules which force UK savers to use their pension funds to buy an annuity has seen even big companies like Standard Life taking quite a hit. In fact, the latter has reported a huge 50% drop in annuity sales since the announcement was made and changes were implemented.

David Nish, Standard Life's CEO, has noted that people with smaller pension pots, most worth less than £10,000, were deciding to take out their money. Others with more savings are currently deferring their decision to a later date, he added.

Nish has said the true long-term impact of these changes in policy will take a good while to become clear, however, the negative profit impact they have will be reflected fairly quickly especially considering “the relatively small size of our annuity business." Annuities contributed 6%, or £45 million, to overall operating profits of £750 million in 2013.

Nish also acknowledged the fact that these changes are important and that they serve the customers well, much more than they do the businesses involved. His criticism is directed towards the way they were announced, which he said gave customers the sense that annuities were not worth having.