Living Time is currently the only provider in this market. Its income plan offers customers a guaranteed income for a minimum of three years up to age 75 and a guaranteed capital value at maturity, which is determined at outset.
The firm has suffered somewhat as a result of AIG’s near collapse in September, because its underwriter, Alico, is a wholly owned subsidiary of the insurer.
Alico has been placed in a special purpose vehicle in preparation for a sale and while policyholders’ money has always been secure, the setback has impacted Living Time’s growth and probably the expansion of the market.
But LV=, a big player in the enhanced annuity market, is planning to move in with a similar product. It is also understood to be considering a fixed-term annuity that gives customers investment options.
Head of annuities Matt Trott says: “We are looking at the space in the market between an annuity and an income drawdown contract.
“We are fairly progressed. We are still in the planning and feasibility stage but it is looking promising. We are very excited about the opportunities there.”
Living Time marketing director Steve Lowe says: “If this is true, we are very pleased. We need more providers in the market to supply the increasing demand from advisers and their clients for modern alternatives to traditional lifetime annuities.”
Annuity Portal managing director Malcolm Thomas says: “Living Time had a bit of a disadvantage with the AIG link, which I cannot imagine did them much good at all when they were trying to launch such a new and innovative product.
“I think it will be good to have LV= in there to grow the awareness in the marketplace, particularly as they have a more public presence through sponsoring the cricket and advertising on the TV.
“All of these products are just chipping away at the gap between conventional annuities, which can only be positive for advisers and clients.”
Annuity Direct director Stuart Bayliss agrees: “One of the major issues that is slowing down the take-up of Living Time’s product is the fact that there is no competition so having more than one company there will encourage many more advisers and clients to look at the temporary annuity option.”
Do you agree that the retirement market is crying out for greater choice? Will fixed-term annuities take off? Would you be more likely to recommend them if the market was a bit more crowded?
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