View more on these topics

Weight of demand could collapse annuity market

The annuity market could collapse within 10 years because providers will not be able to meet demand, independent pensions adviser to the Government Ros Altmann warned adv- isers at Money Marketing Live last week.

Hargreaves Lansdown head of pension research Tom McPhail said the annuity market is projected to grow to 7bn-12bn by 2012 and the bulk buyout market will grow from its current 2bn-3bn a year to up to 128bn a year in the same timeframe. He said if the market gets anywhere near this size it would collapse due to lack of capacity.

Annuity rates are also expected to continue to decline and after A-Day, this will only worsen, with many wealthier clients expected to favour alternatively sec-ured pensions over annuities, effectively stripping out subsidies to the total annuities pot.

Altmann said insurers’ unwillingness to take on longevity risk is set to grow and can only be assuaged by the Government launching longevity bonds or ultra- long-dated gilts. She said: “There will come a point in the next 10 years when annuity providers will not be able to meet demand.”

McPhail said: “If the deferred annuity market gets anywhere near 128bn a year, it will collapse because the capacity is not there.”

Millfield Partnership pension specialist Graham Duckett says the anticip-ated fall in annuity rates over the next 17 years will wipe out any investment growth over this period.


Vertex completes Exchange purchase

Vertex has completed the 95.3m acquisition of Marlborough Stirling, owner of The Exchange.Andy Hunt has been appointed managing director of Marlborough Stirling, replacing the old chief executive Mike OLeary who has left the company. Hunt was previously sales and marketing director of Vertex.Non-executive chairman Geoffrey Harrison-Dees has also left the company along with non-executive directors […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm