LV= is consulting with staff on a proposal to stop selling enhanced annuities and increase its focus on secure drawdown.
The insurer says the proposed move follows a review of its annuity business and reflects changes in retirees’ buying habits since pension freedoms, as well as the interest rate and regulatory environment.
LV= will offer standard and enhanced annuities from other providers and will consider offering annuity solutions from potential partners through other propositions, for example its Retirement Account.
LV= retirement solutions managing director John Perks says: “In an ongoing low interest rate environment and with Solvency II capital requirements further depressing annuity rates, we no longer feel our enhanced annuities provide good value for customers.”
He says: “We believe it makes sense, therefore, for LV= to focus on a mixture of safe drawdown products, fixed term annuities, guaranteed funds, investments and equity release.”
LV= will be contacting advisers to inform them of any changes.
The FCA announced last month it is investigating a number of annuity providers amid concerns they failed to inform customers they may be entitled to a higher rate of income through an enhanced annuity.