Evergreen Retirement Assurance is accusing with-profits annuity providers of “fiddling” their figures and ignoring concerns raised by a CII report on with-profits annuities.
The concerns were raised in a CII working party report in October, which exp ressed fears of life offices using outdated mortality assumptions to boost with-profits annuity rates artificially.
Evergreen says many top with-profits annuity providers are ignoring the need to revise mortality projections for inc reasing longevity. It says providers do not ignore mortality improvements on non-pro fit annuities because these products require life offices to pick up the bill for additional annuity payments.
It also says many life offices are cooking their with-profits annuities books to generate similar income for with-profits annuities as for non-profit annuities.
Evergreen says, by artificially inflating initial income levels, soo ner or later incomes will plummet and there will be another misselling scandal.
Corporate development dir-ec tor Bob Bullivant says: “Something is being fiddled. You can't have 5 per cent assumptions on with-profits annuities producing nearly the same annuity as a 6 per cent assumption used for non-pro fit annuities.”
l With-profits or with losses?, p14,16