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Britannic chief offers simplified annuity model

Annuity sales could be simplified to create an industrywide standard for the bottom end of the market, making one-on-one advice only necessary for the wealthy, says Britannic Retirement Solutions corporate development director

Bob Bullivant.

Speaking at an ABI-sponsored seminar on annuity reform in London this week, Bullivant said consumers, especially at the lower end, are not served well by the complicated nature of the market.

His new model would see “Mr and Mrs Average” being sold a standard annuity with only four characteristics – paid monthly in arrears, widows receiving 50 per cent of their partner&#39s stipend, a 10-year guarantee and a choice between a level or retail price indexed annuity. If this were adopted across the industry, Bullivant believes advice would only be necessary for a second tier, where a few further options would be available, and an upper tier, where wealthy pensioners would have a range of sources of income to consider. The industry says lower earners would still need advice about the open market option. But Bullivant says under his plan, it should only be the wealthy who consider exercising the Omo.

He said: “I am proposing a new way of dealing with retirement by segmenting clients by need.”

Annuity Bureau managing director Peter Quinton says: “The concept is good. How it will work practically will take a lot more thought though.

“It has pluses and min-uses, the pluses being a simple system delivered to the bottom end of the market, where realistically there is no advice available.”

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