Canada Life is buying Retirement Advantage, bringing the number of providers now operating in the open market down to just six.
The open market for annuities now comprises just , Aviva, Canada Life and Legal & General for standard and enhanced rates, Scottish Widows and Hodge Lifetime for standard rates and Just Retirement for enhanced rates only.
Nine providers have pulled out of the market or merged with other providers in recent years – Aegon, LV=, Partnership, Prudential, Standard Life, Friends Life, Reliance Mutual, B&CE and Retirement Advantage.
Annuity rates have fallen by 5 per cent since the introduction of pension freedoms. In April 2015 a £100,000 pension bought a 65 year old a single life, level annuity of £5,447. Today it buys £5,166 (source: HL Annuity Calculator).
Hargreaves Lansdown senior pension analyst Nathan Long says: “Another annuity provider bites the dust, as the impact of the new pension freedoms continues to be felt. We have not seen Retirement Advantage offer particularly competitive annuity rates for some time, so whilst we don’t expect annuity rates to be impacted in the short term, it is still disappointing that another provider has left the market and long term this cannot help competition, something we know the FCA is currently concerned about. Retirement Advantage’s innovative retirement income solutions could get a new lease of life with Canada Life’s backing. Shopping around for the best annuity rate remains critical for anyone approaching retirement.”