View more on these topics

Old Mutual and Royal London pour cold water on guaranteed drawdown launches

Providers wary of cost of mixing guarantees into drawdown products as talks results in lack of new products

Warning-Sign-Bumpy-Road-Recovery-Recession-700x450.jpg

Old Mutual and Royal London have poured cold water on potential guaranteed drawdown product launches.

Both providers have held discussions about launching unit-linked guarantees which combine drawdown with assured levels of income, but have elected to hold off on any new products for the time being.

Old Mutual had been looking at the prospects for a launch, but has made the decision to set plans to one side for the time being, noting that consumers were unlikely to understand and value a product offering a blend of drawdown and annuity.

“It’s down to cost,” head of retirement policy Jon Greer says. “I know the FCA is disappointed the market hasn’t changed but frankly there are reasons for that and those are nothing new.”

Old Mutual also notes that its existing retirement products did not suffer from excess volatility, so building in protections in some cases would not be necessary.

Why are advisers put off by guaranteed drawdown?

In November last year, Royal London told Money Marketing it was assessing a number of ways in which they could underwrite a drawdown solution, including using its protection businesses, Bright Grey and Scottish Provident, to set up structured products or life insurance to sit below flexible income withdrawals.

This also appears to have been put off, however.

Royal London head of corporate affairs Gareth Evans says: “We are not going ahead with anything right now. Whether or not we completely dismiss it I’m not sure, but there isn’t anything on the stocks coming ahead.”

Few players in the market offer guaranteed drawdown products currently.  Aegon, Metlife and Prudential were three of the front-runners.

Metlife, however, pulled out of the unit-linked guarantees market as it announced it was closing its wealth management arm to new business earlier this month.

Recommended

1

Advisers express fears over lack of guaranteed income choices

Two thirds of advisers are worried that clients who want lifetime guaranteed income do not have enough choice. With 40 per cent of consumers fearing the decline in annuity rates and withdrawal of providers from the market will continue, a report by MetLife suggests that a lack of guaranteed income choices is leading to people […]

Portfolio-Bonds-Investment-Business-700x450.jpg

How annuities turn consumers off guarantees

Using the word “annuity” can put consumers off guaranteed income products, a research paper published by the FCA suggests. More than 900 consumers were given the hypothetical choice between retirement options including buying an annuity, self-annuitising, or spending the money until it ran out. When the word “annuity” was not used, 66 per cent of […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There is one comment at the moment, we would love to hear your opinion too.

Leave a comment