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Hartford’s hits and myths of retirement

Managing director Enos reveals that company has had to shelve some plans due to clouded pension legislation.

Hartford Life managing director John Enos says he welcomes competition in the variable annuity market but is frustrated by the lack of clarity over pension legislation in the UK.

The US company boasts of pioneering the variable annuity product in the US, where the concept has really taken hold.

Over the last year, Enos has seen AIG bring its Living Time product into the market, Aegon launch its Five for Life guaranteed product and Met Life gearing up to launch its trustee investment plan in the UK in 2007.

Enos says there is more than enough space in the market for all of them and is glad that IFAs seem to be embracing the concept. But he doubts whether many people will want to use an offshore bond – as with the Aegon product – to secure a guaranteed income for life.

Hartford Life, which is the biggest annuity provider in the US, only brought its range of capital-protected investment bonds to the UK last year. The SafetyNet guarantee on its Gold flexible investment bond offers investors the ability to lock in any gains made on its five risk-graded balanced managed portfolios, and to guarantee a fixed level of income from the fund.

Enos has spent much of his time railing against withprofits and the companies that offer WP products, arg-uing the product is no longer relevant and providers’ service has been poor.

Deflecting criticism that guaranteed annuity products are expensive, Enos points to the opaqueness of with-profits funds. When presented with the continuing high performance of Prudential’s with-profits fund, Enos is unimpressed, arguing that something would have to be very wrong for with-profits funds not to perform well in the current bull market.

The problem comes, he claims, when the market takes a downturn and with-profits funds move away from equities, reducing the prospect of decent returns and changing entirely from the product that the customer invested in, which he says does not sit well with the FSA’s treating customers fairly initiative.

Enos is intensely frustrated by the vagaries of pension legislation, particularly over the “mythical” age of 75 when people are forced to annuitise and he hits out at the pre-Budget report restrictions on alternatively secured pensions.

He says: “The Government seems to think that people reach a mythical stage of life and suddenly want to do something completely different with their pension income.”

Enos reveals there are ventures that Hartford Life has been considering which have now been put on hold.

He says: “We do not like operating in markets where the legislation is unclear.”

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