Norwich Union and Canada Life are planning to plug the gap in the enhanced annuity market left by Britannic Retirement Solutions' closure to new business last month.
The move comes as GE Life raises the minimum sum for annuity purchases from £5,000 to £10,000.
Canada Life is looking at an enhanced and impaired annuity launch in the second quarter of 2004 while Norwich Union's impaired life annuities could be on the market later next year.
BRS's withdrawal has left the enhanced annuity market dominated by GE Life and Prudential.
GE Life's increase follows Legal & General's rise in its minimum from £1,000 to £5,000, leaving Standard Life the only product provider taking open market business under £5,000.
Advisers warn that the lack of competition in the market – with Standard Life rarely topping the annuity tables – makes recommending additional voluntary contributions increasingly difficult to justify.
Canada Life retirement income manager Peter Carter says: “We are looking at a launch in both impaired and enhanced annuities in the second quarter next year. This will be the big market.”
Norwich Union head of retirement product development Simon Warsop says: “We already offer severely enhanced annuities and non-enhanced annuities and we are looking at the area in between.”
Bates Investment Services head of pensions James Jones-Tinsley says: “GE Life's move shows the lack of competition since BRS closed to new business.”
William Burrows Annuities director Billy Burrows says: “With such a shortage of product providers taking small funds, you have to question whether it remains good advice recommending AVCs.”