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‘Bit of a wobble’: Insurers defiant on share price drops after Budget bombshell

Providers have reacted with defiance after seeing billions wiped off their share prices following a radical overhaul of the pensions market announced in today’s Budget.

The Chancellor announced that from April 2015 anyone over the age of 55 will be able to take their entire pension pot as cash. All retirees will also receive face to face guidance through a £20m provider levy.

The announcements have wiped billions off insuers value. At the time of writing annuity specialist Just Retirement’s share price had fallen 44 per cent while its rival Partnership’s share price has dropped 56 per cent.

Legal & General shares were down 10 per cent, Aviva down 6 per cent, Prudential 3 per cent and Standard Life 3 per cent.

Just Retirement group external affairs and customer insight director Stephen Lowe says: “Investors have had a bit of a wobble while they work out what it means for them. It’s such early news that people need to process it and separate fact from emotion.

“We don’t expect consumer behaviour to change much after these proposals. At the lower end with small pots you might see more people choosing that option but under advice people have been buying lifetime annuities so nothing’s changed.”

Lowe said the Government could be making the changes to boost its revenue rather than to help consumers.

Lowe said: “We have to be really careful we don’t transfer one consumer challenge to another. If you are going to invest it in an Isa then which funds do you put it in?

“It’s a different kind of challenge that people might not understand they may lose secure income for life. That’s what we have to guard against and why advice or guidance is crucial to stop people walking into dangerous territory.

“Is it a positive for the exchequer or consumer? This might be a nice clever way of raising revenue.”

In a stock market statement, Legal & General says: “Legal & General is well-placed to continue to develop a product suite that includes good-value drawdown and protection against longevity risk as well as provision of investment income. The guidance regime outlined by the Chancellor will be vital in ensuring that many pensioners do no make choices they subsequently regret.”

Standard Life adviser and workplace managing director Barry O’Dwyer says: “We will now work with advisers and customers to help them understand and make the most of these changes. We believe we are well placed to help customers make well informed choices in this new, more flexible environment.”

Prudential Group chief executive Tidjane Thiam says: “We have experience of working with many different structures to deliver positive outcomes for our customers around the world. Prudential is well placed to continue to provide products that look after its customers’ needs.”

Partnership and Aviva declined to comment.

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