Legal & General is working on a simple asset-backed annuity aimed at the mass market.
The company is to test the idea with advisers alongside plans for a standard annuity with more income flexibility, targeting clients with a pension pot of around £30,000.
Head of annuities Tim Gosden says: “There are lots of products that do not cater for the mass market. People always look for something to run alongside conventional annuities but the options available are not targeted at the mass market. We are looking at standard annuities with increased flexibility on the income and are keen to develop a very simple asset-backed annuity but it has to be transparent.
“Solvency II will have a negative impact on annuity rates and people will look for more opportunity for growth. There is a big opportunity because variable annuities have been competing with income drawdown but we want to compete with standard annuities. We are still formulating our ideas but will be testing them with advisers soon.”