Radical reforms announced during the Budget in March have seen a slump in individual annuity sales, with providers braced for an overall drop in new annuity business of up to 75 per cent.
A number of large insurers, including Aviva, have set out plans to increase their focus on bulk annuities – where an insurance company takes on the risk of paying pensions to defined benefit scheme members in return for a fee – in a bid to plug the gap.
According to the FT, Wilson has told investors margins on bulk annuity contracts will be squeezed as more insurers turn their attention to the market following the Budget.
“I know some people in the market are saying that the margins aren’t going to decrease on bulks,” Mr Wilson said. “I disagree.”
He added: “I think the margins will decrease, I think that’s inevitable.”