The Annuity Exchange is launching a whole-of-market shopping around tool which director Stuart Bayliss says will also help pension providers retain lucrative single-tie deals.
Earlier this month, the Association of British Insurers confirmed plans to revamp its shopping around code of conduct, as it tries to establish transparency in the annuity market and make shopping around the default option.
Bayliss says the Annuity Exchange has developed a product which will allow insurers to comply with the ABI’s stricter rules.
He says: “The ABI is taking us beyond single-ties to a certain extent, but in some circumstances the single-tie delivers the best rate. So what providers will need to do is demonstrate they are showing the marketplace to retirees and offering them a single-tie to what is the best deal out there.”
Prudential has a single-tie arrangement with Royal London, although the provider lost a similar deal with Zurich to Legal & General in October 2010. In May last year, Pru reported a 42 per cent slump in first-quarter external annuity sales, from £26m in 2010 to £15m in 2011 after losing the Zurich contract.
Radcliffe & Newlands chartered financial planner Mel Kenny says: “Providing a backdrop of quotes in which a single-tie annuity sits is much better than current practice, but of course this might blind people to the possibility of obtaining even better rates based on their own individual life expectancy should there be lifestyle or medical factors to consider.”