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Annuity firms in move to save moneyback plans

Annuity providers are making a last-ditch attempt to save moneyback annuities amid concerns that the Government has turned its back on the concept.

The ABI&#39s consumer research shows that 47 per cent were interested in moneyback annuities and would be happy to pay with lower rates.

However, noises coming from Government circles suggest it could reject the idea while IFAs say current low annuity rates mean people would forego such products to get the most money they can.

Moneyback annuities work by returning a lump sum if the annuitant dies before the income received matches the initial purchase price.

Norwich Union says the moneyback proposals are tax-neutral and it would be happy to work with the Government to overcome any concerns surrounding the proposals.

Prudential Annuities managing director Tom Boardman says: “We have not been able to get reassurance from the Treasury and are getting nervous that this positive step is not being considered. Given increasing life expectancy, it would only cost 3 per cent and you would always get your money back.”

Richard Jacobs Pensions & Trustee Services director Richard Jacobs says: “Money-back annuities are a wonderful idea to enable the insurance companies to keep their monopoly of the market.

“Flexibility in retirement is the key, not just tinkering with contracts. I do not believe there would be much takeup or that it would cost just 3 per cent.”

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