The UK’s biggest pension providers are unlikely to have a flexible drawdown product in place before the April 6, 2011 start date.
Earlier today, the Treasury outlined proposals for the abolition of annuitisation at age 75. The regime, including new flexible drawdown arrangements, will go ahead from April next year despite concerns over the ability of providers to update systems in the four month timescale provided.
Speaking to Money Marketing, Prudential deputy chief executive Barry O’Dwyer says the life and pensions firm will not be in a position to launch in April 2011. He says: “Providers are unlikely to be in a position to launch for April 2011, we certainly will not be. And I know that a lot of our major competitors will not be either.
“What the Government has proposed is quite sensible, but we will have an embarrassing situation where some of the major insurance companies will not have a flexible drawdown product and that will be annoying for customers.”
Both Aegon and Standard Life also indicated they will struggle to be ready by April. Aegon pensions development manager Kate Smith (pictured) says: “We have got to change all our processes and documentation, so that is our priority. And there are still bits of the jigsaw missing, particularly from the FSA who are consulting on their Cob rules.
“I think there is a hell of a lot to do before April. We probably will not have a flexible drawdown product ready by then. We really would like to, but we have to set our priorities and number one is doing all the things the regulator says we have to do. And the ‘have to do’ list is huge.”
Standard Life senior pensions policy manager Andrew Tully says the company remains “uncertain” of hitting the deadline. He says: “There are obviously some things that are legislatively required, so they are at the top of the list, and flexible drawdown falls after that. If we can do it we will do it, but I certainly will not be guaranteeing it will be available on April 6 at the moment.”