Legal & General is mulling introducing both more flexible annuity and drawdown products as it looks to expand its product range this year.
L&G retail retirement chief executive officer Chris Knight tells Money Marketing that a change in retirement patterns has spurred the provider to discuss new annuity options, saying that these are “part of the plans for this year.”
Knight gives the example of someone retiring in their 50s who may need a pension income until they are 65, and a cash-out plan “might be just what they need to fill the gap.”
Knight says: “We do believe in [annuities], that they do have a role to play. There is fixed term, there are cash-out plans, there is a range. We need to start by getting that out more positively.”
Knight also hinted that the provider may look to purchase further annuity back-books after picking up a £3bn portfolio from Aegon in 2016.
He says: “There are back-books of business out there – we are open for that part of our core business.”
When it comes to a guaranteed product built around drawdown, Knight says this was in the firm’s plans, but may come at a later stage because of the complexity of designing new solutions.
Knight says: “If stock markets go down in your 60s, maybe you can go back to work, but later it could be hard because you can’t get back from that.
“There probably is room for more innovation on that. I wouldn’t pretend we have cracked it yet but we are definitely working on it. It isn’t an easy problem.”