In the past month, variable annuity providers Aegon Scottish Equitable and MetLife have increased the price of guarantees to reflect continued volatility in the derivative market. The Hartford is also believed to be reducing its maximum equity exposure to derisk its portfolio.
But Lincoln head of products and marketing Simon O’Connor rules out any imminent changes to its product, saying the firm will absorb the cost of securing guarantees. He says: “We will keep it under review and if we feel we need to change the level of guarantee we will take necessary action but today we have no plans to do that.”
Hargreaves Lansdown pensions analyst Nigel Callaghan says: “Of all variable annuity contracts, Lincoln has given itself most room for manoeuvre. I am not surprised they are the least worried about increased costs but I do not see how they can continue to absorb the extra cost indefinitely.”