Royal London has hinted that it could make a play in the guaranteed drawdown market.
There are currently only three providers offering guaranteed drawdown products – often referred to as unit-linked guarantees which combine drawdown with assured levels of income – in the UK: Aegon, MetLife and Prudential.
Speaking to Money Marketing, Royal London pension specialist Fiona Tait suggests that the company could leverage its two protection businesses Bright Grey and Scottish Provident, which were recently rebranded into the main group, to set up a product.
Tait says: “We now have a company that includes the expertise of Bright Grey and Scottish Provident. We now have people with expertise in life expectancy that we didn’t have before, and there’s a sort of recognition we should do something with that.”
Tait says there are “all sorts of ways” a guarantee could be built into its drawdown products, from using structured products to some form of life insurance as is common in products designed in the American market.
Tait says: “We think sustainability is a key thing. We will look at different ways it could be done…I think what we want to do is see what we can offer in that space that will allow us to achieve the levels of security they want. We will look at everything extra that delivers that and what other mechanisms could deliver that security.”
However, she says any launch was unlikely to be immediate.
She says: “We are always looking at a long list of things to get done….We are talking about a whole new solution here. In the short term we will be working with what the priorities are for our members, probably concentrating a little bit more on the group side and the auto-enrolment market.”