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Equiniti Annuity Industry Survey 2013

2 Equiniti Annuity Industry Survey 2013

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Equiniti Paymaster is a leading business process services provider, delivering pension administration, insurance and payment services to more than 750 schemes and 3 million members in major public and private sector organisations. Equiniti Paymaster makes payments totalling over £13 billion per annum to pensioners, dependants and annuitants in over 180 countries worldwide.

Equiniti’s pension solutions division provides software and services to a total of 7.3 million members in the UK and has won industry awards in every year for the last decade, including in 2012 for Pension Technology at the UK Pension Awards and for Best Pension Administration Software at the Pension and Investment Provider Awards.

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Equiniti Annuity Industry Survey 2013 3

Welcome to the 2013 Annuity Survey conducted by Equiniti Paymaster.

The survey was conducted in April 2013 and sought the views of professionals throughout the Annuity industry including product and service providers, retirement planning consultants, employee benefit consultants, regulators and influential bodies.

The survey generated a high percentage of respondents and most respondents qualified their views with additional comments which proved very helpful when it came to interpreting the results.

As with all surveys and such a strong cross-section of Industry respondents, a mix of views is clearly held.

The annuity industry response to auto-enrolment and “pot following member” is lukewarm, which will clearly disappoint the Government, but will find favour with the NAPF.

The ABI Code of Conduct on retirement choices gains good support that this will result in an improved outcome for consumers. However the Industry clearly feels that there is still much more that could be done.

The question of advice at retirement and whether things are really different after RDR is a question raised by a number of respondents. The issues that raised the greatest number of comments and contrarian views related to the role of retirement planning and the provision of Long Term Care.

The overriding view was that the industry needs to work closer with the Government to develop suitable and commercially viable products to serve consumer needs. They cannot work in isolation, but need to work together to find some answers to a growing social issue.

I would like to thank all of the experts who have shared their views and insights, contributed to the success of this survey and helped us to raise money for Age UK.

Keith Boughton Director, Pension Solutions Division

Introduction

The question of advice at retirement and whether things are really different after RDR is a question raised by a number of respondents


The 2013 Annuity Industry Survey was conducted between the 8-22 April 2013 by Equiniti Paymaster.

The questions were defined by the experts and support team of Equiniti Paymaster and were based on current topics and debates within the annuity market.

This is the fourth time that the survey has been carried out.

Previous surveys were conducted in 2010, 2011 and 2012. For 2013, we received 40 answers from well renowned annuity professionals and commentators within the two week period.

The results give a good overview on the current market tendencies and issues.

We hope our analysis will provide annuity professionals with improved insight into the market whilst raising current opinions and concerns shared by many industry professionals.

These responses were received anonymously and any comments are not attributable to individuals.

Methodology


The 2013 Annuity Survey has looked at three main areas of the industry; the Retirement Journey, Retirement Advice and Annuity Products.

Retirement journey:

The annuity experts surveyed believe that despite the new ABI code of conduct, which they welcome, people still need much more information and education around their retirement savings and the best methods by which savings can be maximised. The majority of experts believe only 50% of their clients receive a level of income they expect and need in retirement.

The experts believe that introducing a system of warning notifications about the impact of price inflation at the point of providing retirement quotations would be helpful. However, they advise that a warning at this point in time is too late to assist in effective retirement planning.

Retirement Advice:

The experts were also questioned regarding their thoughts on the processes of at retirement advice, with over 85% of the experts believing that a common discharge form and the widespread adoption of the Origo standards would be an improvement for the industry.

The impact of RDR has been viewed with scepticism; the majority of experts felt that the predicted advice gap is now a real concern and the transparency of cost that RDR would bring has not been achieved. The experts also feel that an FCA push for compulsory OMO is a good thing, but likely to be very challenging.

Annuity Products:

The experts were lastly questioned about annuity products and although there was resounding support for lifetime annuities, with them remaining the most popular product, the experts are undecided whether lifetime annuities will fulfil the needs of the market for the next five years.

Enhanced annuities are supported; however the experts are split as to whether the direct to consumer market is misleading the customer when purchasing an annuity.

Moving away from annuities, equity release is widely supported as the principal method for people to use their property assets to fund retirement, and pension liberation is seen a grave problem that could seriously affect the credibility of the industry which needs urgent attention from the Pension Regulator and HMRC.

Recent legislation from Europe has impacted the market in the past year and will do so further in this year and the next. The impact of gender neutral pricing has resulted in a very mixed response from the experts; however the majority commented that there are many other factors aside than gender which influence pricing. The experts also felt that the potential for new entrants and specialists in the market will not reduce due to Solvency II or low gilt yields.

Finally, for the second year running the experts have shown a lack of confidence that the industry will meet the HMRC’s Real Time Information implementation deadlines.

Executive Summary



Survey results Retirement Journey


1Auto-enrolment combined with ‘pot follow member’ will solve the issue of small pots?

Auto-enrolment has exacerbated the problem, but ‘Pot follows member’ could go some way to solve it.

Auto-enrolment has had a high profile in the past year and recent announcements regarding a ‘Pot Follow Member’ system continue to bring these issues to the attention of the general public. The survey results show a real split down the middle in terms of its impact on a highly mobile workforce and low levels of pension accumulation. It suggests a relatively lukewarm response to auto-enrolment as heading in the right direction, whilst highlighting that it probably causes as many problems as it solves for the industry both in terms of small pots and small employers.

Annuity market views:

n The amounts of money captured by auto-enrolment will not solve the problems caused by increasing longevity. It is an improvement on the current situation but not a complete solution.n Auto-enrolment has exacerbated the problem, but ‘Pot follows member’ could go some way to solve it.n It will certainly help going forward but in itself it won’t address the issue of small pots from legacy employments which are often forgotten about by members. It will require a more extensive solution to address the entire issue.

0

5

10

15

20

25

30

35

40

2%Strongly Agree

37%Agree

27%Neutral/I don’t know

29%Disagree

5%Strongly Disagree


2The ABI Code of Conduct on Retirement Choices, a mandatory code for all members, came into force on 1 March 2013 and is heralded as the ‘biggest change ever seen’. This will significantly increase the number of people reaching retirement with the confidence to make the right pension decision.

A further positive step to ensure that OMO is the default.

The ABI guidelines are now in force. Our survey shows a general support with over a half in favour of them producing improved outcome for individuals. The comments highlight that this will only get better and is still down to individuals engaging more in their personal retirement planning and decisions.


n It will not help if people reaching retirement aren’t given the choice of alternatives to lifetime annuities. This is particularly true now when interest rates are very low and are expected to return to more normal levels in the future.n A further positive step to ensure that OMO is the default.n The implementation of the Code was a significant achievement for the ABI and it will result in consumers being better informed and achieving better outcomes at retirement.n As the recent FSA announcement to review the retirement market shows there remains a concern that in itself it does not go far enough. Whilst it is still early days, to date there has been little change in the behaviour of customers.

0

10

20

30

40

50

5%Strongly Agree

49%Agree


24%Disagree

10%Strongly Disagree


3An HSBC Survey on ’The Future of Retirement’ suggests that the average person’s pension pots will support only 7 years of a 19 year retirement. It should be mandatory to provide a warning notice (not dissimilar to those provided on endowment mortgages) with all quotations that the amount saved / invested will only provide a specified limited amount of income.

Any warning will come too late to change retirement outcomes.

Our survey shows general agreement amongst the experts, with three quarters of respondents in favour of warning notices with quotations. Having said this, the question attracted a real mix of comments. Communication was the key theme, but whilst some respondents feel that there is not enough, others feel that there is too much or that all communications lack impact and are ignored, so it is all a waste of time. The comments also highlight that telling individuals at the point of quotation is far too late to do anything about it!


n Any warning will come too late to change retirement outcomes.n This pre supposes that a pension is the only way to save for retirement, which it is not. More needs to be done around how retirement income can be funded, and then pension illustrations can show how they are progressing on the pension element of their savings. There is a danger by not giving the whole picture people become disengaged.n I don’t believe a warning notice is practical or necessarily required. However, more can be done with illustrations of benefits to make them more informative and useful to the consumer.n There is already in place sufficient disclosure around projected values from insurance contracts. Further disclosure will not address the fundamental concern that people are on average not saving enough to support the lifestyle they expect.

0

10

20

30

40

50

20%Strongly Agree

41%Agree


20%Disagree

7%Strongly Disagree


4In relation to Q3, what percentage of clients retiring in the next 5 years will consider they have at least the level of income in retirement they expect and need?

Wants, Expectations and Needs give 3 entirely different results.

Our survey shows a general consensus, nearly 50% think only 25% will reach such a level, and almost 90%, that 50% or less retirees will receive the level of retirement income that they expect. The comments reinforce that this is largely due to the dominance of DB Pensions for current retirees, suggesting that in future those relying upon DC pensions of one form or another are going to be increasingly disappointed.


n I think expectations are already being lowered hence the bar will be reached by more, but still not many.n Hard to quantify but a common theme is that people realise that they will get less than if they retired in the past because of falling annuity rates.n Wants, Expectations and Needs give 3 entirely different results.n The current low interest rate environment combined with greater longevity means people are increasingly putting off retirement or supporting this with part-time employment.

2%

44%

44%

10%50-7

5%

75%

plu

s

25-5

0%U

p to

25%


5The Pensions Regulator is to launch a thematic review of its common data. This should make retirement easier for those individuals with accrued final salary pensions. It should be made mandatory for all insurers and pension scheme trustees to evidence their efforts and use of all means available today to find lost members of these final salary schemes?

Trustees have to balance the costs of trying to find lost members

The majority of respondents, nearly 4 out of 5, agree that more effort should go into tracing pension fund members enabling their benefits to be paid out to them. The comments reinforce a view that this is seen as being the responsibility of the trustees. There is a question as to just how much cost and effort is put into this at the expense of what can be small pension benefits.


n The old procedures and practices are outdated and do not utilise modern capabilities to enhance the quality of personal data.n I think the onus should be more on trustees than on insurers.n All available means are too strong. The trustees have to balance the costs of trying to find lost members against the size of pots and the likelihood of success.n I accept a need to take reasonable steps in this regard but feel that this should be proportionate to the sums involved.

0

10

20

30

40

50

35%Strongly Agree

42%Agree


10%Disagree

0%Strongly Disagree


6The long term issues of care for the elderly is getting increased attention and the Government’s proposed cap on costs is in response to this. However the insurance industry’s initial reaction to the idea of developing specific products to support the Government’s aims has been very lukewarm. The Government should be taking greater action to require the insurance industry to develop supporting products to address long term care needs?

Long Term Care is a growing social issue and this question probably provoked the most comments. The survey revealed a real split in opinion, as to whether the Government should be taking greater action. Various themes arose from the comments but it was clear that all parties recognise that there is a real issue to be addressed and that all parties, the Government and the insurance industry need to work together to try and come up with some answers. We need an approach which meets the need but allows the industry to develop commercially viable products. The insurance industry cannot be expected to address such a fundamental social issue alone.


n You can only insure against a possibility. For many, it is PROBABLE now that they will have care needs before they die. The vast majority will, however, never come anywhere near the cap, but it’s the accommodation costs that are the killer.n Recent Government initiatives have created confusion and increased complexity and also risk creating false security as a result of the desire to be seen to be addressing an increasingly important issue. Much clearer and consistent messaging of what protection the government will provide and what is the responsibility of the individual is required over a sustained period. In addition, incentivisation of preferred solutions is likely to be required to establish significant self provision. These actions are likely to all be necessary before product innovation can be expected to be effective.n The insurance industry has developed long-term care products but the take up has been poor not least because of the cost of coverage. Increasing the ‘supply’ of products will not address the ‘demand’ side issue of affordability.n “Forcing” products to be developed does not mean they will be purchased or meet a need. A bigger issue here is the false impression the Government is giving that there is a cap - what the state will contribute to costs of care and what needs to be funded by the individual and when - it’s not clear, and giving people a sense of security which they do not have.

0

5

10

15

20

25

30

35

20%Strongly Agree

29%Agree


34%Disagree


It is probable now that they will have care needs before they die


7The elapsed time to process a pension transfer has come a long way since the introduction of Origo. We are now at a point where all providers and schemes should be required to adopt a common discharge form and to complete transfers within the Origo standards?

Extending this coverage to pension schemes could undermine this trust

There was general support, in fact strong agreement, 54%, to the adoption of common standards for discharge / declarations for the release and transfer of pension funds. The industry and pension bodies are already tackling the issue. Let’s hope for a speedy and total adoption of such an initiative.


n This is about to happen as a result of TISA initiatives. The annuity quote form has a common discharge. TISA is getting agreement for all providers to use it and is opening discussions with NAPF.n Origo only provide a proprietary solution and not transfer standards. Extending the TISA/ UKFMPG approach is the only way to solve the transfer problem across the industry.n Origo largely works on the basis of trust between insurance companies. Extending this coverage to pension schemes could undermine this trust particularly in light of the growth of ‘pension liberation’. A common discharge form may provide some process improvement but in itself will not be enough to fully address the issue.n Some insurers are still appalling, both in quality of process and time taken. There are no justifications for this.

0

10

20

30

40

50

60 54%Strongly Agree

32%Agree


5%Disagree

5%Strongly Disagree


Survey Results@ Retirement Advice



8The expectation was that RDR would lead to an advice gap that would impact negatively on the ability of those with small pension pots, the poorest, and people in poor health, to maximise their retirement income. This is not the case as the advice gap is being filled by non-advised sales?

The process to date is only serving to get better annuities which is less and less often the same as ‘maximising their retirement income’.

The Survey shows less than 20% of respondents feeling positive about the impact of RDR on closing the advice gap. The comments qualify this partly on the basis that it is too early to say, but also 60% believe that the growth of non-advice channels leaves individuals at risk of not getting sufficient advice to make good retirement decisions.


n There is plenty of evidence that those with small pots are being sold annuities simply on price. There are many other considerations and just because someone has a small fund they shouldn’t be treated as a 2nd class citizen. A good example is the potential mis- selling last Nov / Dec before gender neutral came about.n The process to date is only serving to get better annuities which is less and less often the same as ‘maximising their retirement income’.n The majority of insurance company customers have small pots and hence were already excluded from the IFA advice market. The RDR has further driven down the number of advisers and the advice market is increasingly seen as the preserve of the wealthy. Customers with smaller pots are increasingly adopting a DIY approach facilitated by price comparison sites.n Technology advances can also help in reducing the time spent on small ticket cases, making them more attractive to advisors.

0

5

10

15

20

25

30

35

40

0%Strongly Agree

20%Agree


39%Disagree



9

Retirement income needs to be reviewed in its entirety.

The survey split the respondents right down the middle! Those in favour support it as a good idea but see real challenges in how to practically implement such practices. Those against see it as impractical and ignores the complexities of comparing not only on price but differing annuity products. Both see the early capturing of underwriting information as valuable.


n Annuity rates only reflect current market conditions. OMO has worked for enhanced annuities, but more insurance companies are ensuring they have enhanced products available and competitive rates for their existing customer base. Success of OMO should not be measured by how many people actually move provider, but the quality of their informed decision.n For many small pots this will delay things and the size of the pot means it is unlikely that the consumer will have a competitive advantage.n The core issue here is the annuity itself - retirement income needs to be reviewed in its entirety.n Investment in education regarding the benefits of OMO is preferred to mandatory rules.

Pricing is more opaque, messy, and difficult to compare.

This question left most respondents on the fence, 37% neutral / don’t know. Most felt this needs more testing and experience before any informed view could be made as to the transparency and awareness of costs when purchasing an annuity. Some respondents feel that nothing has changed.


n Customers don’t know what advice really means - many think no advice firms actually give advice. RDR is not helpful to customers because firms can get 4 % commission for no advice sales but the fair advice charge is about half this. For RDR to work we need a level playing field between advice and no advice.n Pricing is more opaque, messy, and difficult to compare.n Customers remain confused about what they are paying for and are resistant to pay for charges preferring these to be deducted from accumulated fund.

The FSA (to be replaced by the FCA in April) has launched a pension annuity probe amid concerns the pensioners get a poor deal in exchange for their retirement savings. Industry efforts to date have been good at highlighting and encouraging access to Open Market Options (OMO). It should now be made compulsory for every retiree to receive comparative quotes for an annuity showing only the top 3 highest annuity providers once the retiree has determined the shape of annuity that they want?

0

5

10

15

20

25

30

35

17%Strongly Agree

34%Agree


29%Disagree



10One of the objectives of RDR is to increase transparency of charges to the customer. This objective has been achieved and the customer now understands the cost of advice that he is being given re annuity purchase?

Retirement income needs to be reviewed in its entirety.

The survey split the respondents right down the middle! Those in favour support it as a good idea but see real challenges in how to practically implement such practices. Those against see it as impractical and ignores the complexities of comparing not only on price but differing annuity products. Both see the early capturing of underwriting information as valuable.


n Annuity rates only reflect current market conditions. OMO has worked for enhanced annuities, but more insurance companies are ensuring they have enhanced products available and competitive rates for their existing customer base. Success of OMO should not be measured by how many people actually move provider, but the quality of their informed decision.n For many small pots this will delay things and the size of the pot means it is unlikely that the consumer will have a competitive advantage.n The core issue here is the annuity itself - retirement income needs to be reviewed in its entirety.n Investment in education regarding the benefits of OMO is preferred to mandatory rules.

Pricing is more opaque, messy, and difficult to compare.

This question left most respondents on the fence, 37% neutral / don’t know. Most felt this needs more testing and experience before any informed view could be made as to the transparency and awareness of costs when purchasing an annuity. Some respondents feel that nothing has changed.


n Customers don’t know what advice really means - many think no advice firms actually give advice. RDR is not helpful to customers because firms can get 4 % commission for no advice sales but the fair advice charge is about half this. For RDR to work we need a level playing field between advice and no advice.n Pricing is more opaque, messy, and difficult to compare.n Customers remain confused about what they are paying for and are resistant to pay for charges preferring these to be deducted from accumulated fund.

0

5

10

15

20

25

30

35

40

0%Strongly Agree

29%Agree


24%Disagree



11MGM Advantage recently published figures indicating that enhanced annuities account for 46% of advised sales where as the figure is only 4% in the direct to consumer market. This means that customers choosing to go direct to an annuity provider are being misled when purchasing their annuity?

More needs to be done to ensure that all retirees can readily access an underwritten annuity.

This question split the respondents with 44% feeling that consumers are being misled whilst 36% disagreed, even though all see the clear value of enhanced annuities. Others queried the MGM figures and stated that more understanding of their source was required. The comments make interesting reading and demonstrate that understanding the buying habits of the consumer is crucial as contrarian views clearly prevail.


n Enhanced annuity sales is obvious value from advice if individuals are eligible. Those who seek to make decisions without advice are not being directed down the line of testing their eligibility for enhanced annuities enough.n A key objective of the ABI Code is to ensure consumers are aware of underwritten annuities and their potential benefits. The key issue is that more needs to be done to ensure that all retirees can readily access an underwritten annuity.n It shows the reluctance of direct customers to disclose health details, and this is an issue we still need to overcomen It’s difficult to draw the conclusion without further analysis. There can be many reasons why the smaller value direct to consumer cases may not spend time to go down the enhanced annuity route.

0

5

10

15

20

25

30

35

15%Strongly Agree

27%Agree 22%

Neutral/I don’t know

34%Disagree

2%Strongly Disagree


Survey results Annuity Products



12Despite the introduction of an increased range of annuity products, lifetime annuities will remain the annuity product chosen by most retirees over the next five years, driven primarily by the small size of most pension pots?

It is fundamentally the most suitable concept for those on limited means

This question has been asked each year and support for this view has fallen from 95% in 2012 to 86% in 2013. Increasingly enhanced annuities are being seen as the norm and this leads to a lifetime annuity purchase as well. On this slightly revised definition, the survey suggests most are in agreement.


n This is a sad reflection of how poorly the industry is serving the consumer.n It is fundamentally the most suitable concept for those on limited means - a guaranteed risk free income for life.n This is driven by consumers being risk averse rather than purely the fact that their pension pots are generally small.

0

10

20

30

40

50

60

70

80

20%Strongly Agree

66%Agree


10%Disagree 0%

Strongly Disagree


13The existing range of annuity products will adequately meet the needs of the UK market for the next five years?

There is now a need for a new breed of more transparent investment linked products.

The survey shows a pretty clear split as to whether new products and product innovation are needed, 46% vs 41%. Enhanced / underwritten annuities are seen as needing to be the default standard, but more interestingly there were more comments encouraging further investment-backed annuities to meet customer needs.


n I expect there to be a lot of innovation in this area.n Possible growth in investment linked market.n I think there is now a need for a new breed of more transparent investment linked products. We saw a good increase in sales of investment linked business 2011/12 and so there appears to be increasing demand. The question is whether with profits annuities are too opaque for today’s market.n I would expect we will continue to see competition and developments in the underwriting of annuities rather than substantially new products being developed.

The regulator and HMRC really need to up their game on pensions liberation.

The majority, 75%, of respondents agree quite strongly to the need for greater regulatory controls over pensions liberators. The comments suggest the responsibility lies between the HMRC and the Pensions Regulator.


n This could really damage credibility and individual pension administrators do not have access to enough information to make independent informed decisions.n Scheme approval should be moved from HMRC to the Regulator.n Providers can report suspected fraud but the regulator and government still allow schemes to be set up with inadequate checks.n It’s far too easy to establish a pension scheme, and the regulator and HMRC really need to up their game on pensions liberation.

0

10

20

30

40

50

0%Strongly Agree

46%Agree


39%Disagree

2%Strongly Disagree


14SIPPS in particular and the pension industry are seeing some signs of real concern about the brand damage caused by some of the adverse publicity related to overseas property and the growth in pensions liberation “scams”. The Regulator should take responsibility for monitoring and approving overseas schemes eligible to receive pension transfers?

There is now a need for a new breed of more transparent investment linked products.

The survey shows a pretty clear split as to whether new products and product innovation are needed, 46% vs 41%. Enhanced / underwritten annuities are seen as needing to be the default standard, but more interestingly there were more comments encouraging further investment-backed annuities to meet customer needs.


n I expect there to be a lot of innovation in this area.n Possible growth in investment linked market.n I think there is now a need for a new breed of more transparent investment linked products. We saw a good increase in sales of investment linked business 2011/12 and so there appears to be increasing demand. The question is whether with profits annuities are too opaque for today’s market.n I would expect we will continue to see competition and developments in the underwriting of annuities rather than substantially new products being developed.

The regulator and HMRC really need to up their game on pensions liberation.

The majority, 75%, of respondents agree quite strongly to the need for greater regulatory controls over pensions liberators. The comments suggest the responsibility lies between the HMRC and the Pensions Regulator.


n This could really damage credibility and individual pension administrators do not have access to enough information to make independent informed decisions.n Scheme approval should be moved from HMRC to the Regulator.n Providers can report suspected fraud but the regulator and government still allow schemes to be set up with inadequate checks.n It’s far too easy to establish a pension scheme, and the regulator and HMRC really need to up their game on pensions liberation.

0

10

20

30

40

50

29%Strongly Agree

46%Agree


5%Disagree 0%

Strongly Disagree


15Property remains a key asset for most households. The increased pressure on securing an adequate income in retirement will result in a resurgence of Equity Release and Retirement Mortgage products?

We will see far more people trading down to smaller properties, perhaps ones especially designed for retirement living.

The majority of respondents feel that there will be an increase in the sale of Equity Release and Retirement Mortgage products which enable house-owners to gain access to capital tied up in their property. This should lead to further development of Equity Release products, but some suggested downsizing and releasing the capital may offer alternatives to reapplying assets to providing income in retirement.


n Clearly equity in property is needed to finance longevity by most individuals and further product innovation could help overcome the historical issues and perceptions of these products.n When you look at the details, equity release is a rather inefficient way to generate additional income in retirement. We will see far more people trading down to smaller properties, perhaps ones especially designed for retirement living.n It is inevitable that demand for such products will grow given the need to address inadequate savings and the difficulties of realising income from your main residence.

0

10

20

30

40

50

60

24%Strongly Agree

51%Agree


2%Disagree

2%Strongly Disagree


16The ECJ legislation on Gender Neutral Pricing has required providers to review their pricing and offer rates that do not differentiate by the sex of the individual. Far from blending annuity rates, it appears that men reaching retirement now obtain reduced rates whilst women are no better off indicating that product providers have simply taken the opportunity to increase rates?

The market remains as competitive as it was before the Gender Directive

The question provoked the widest variety of responses with no clear pattern. A general theme was that the annuity market is highly competitive and hence the commercial considerations factor in far more elements than this particular change in regulations.


n Imposing Gender Neutral Pricing was never a good thing. Discrimination has to be deliberate, and pricing based on the provenance of a lifetime of statistical evidence is not discrimination.n This market remains as competitive as it was before the Gender Directive.n Annuities are a fiercely competitive market, so it’s just not possible for providers to increase rates and still write the same volume of business. Gender neutral pricing has removed a very lazy underwriting method from providers, which ultimately will benefit consumers as it’s replaced by other underwriting factors better correlated with longevity, like health, geography, occupation.

0

5

10

15

20

25

30

17%Strongly Agree

22%Agree


30%Disagree



17Solvency II, longevity risks, low gilt yields, high capital requirements, etc. have discouraged providers from actively entering the UK annuity market and encouraged others to exit.

However, the impact and risks associated with these are becoming better understood and the attraction of pension funds of baby boomers approaching annuitisation will lead to an increase in the number of annuity providers in the UK in the next few years?

We will see further specialism within the annuity space

Two thirds agreed that the annuity market offers the potential for new entrants or specialists. An ability to mitigate longevity risk was seen as key to supporting new entrants. With the current low level of gilt yields and Solvency II around the corner, you would expect possible new entrants to the industry to be reconsidering, but this shows that is not the case and the comments show an expectation of growth and innovation.


n I feel that ABI code of conduct and other issues may see some smaller providers, who use inertia to support an uncompetitive rate, withdraw from the market.n I agree, although the risk management capability to operate safely and successfully in the annuity market is significant.n We will see further specialism within the annuity space as a result of greater competition rather than an increase in the number of annuity providers.

For an issue that wasn’t on most company’s radar a year ago, I’m not sure how everyone will have fitted it in alongside other priorities such as RDR, AE

For the second year in a row, a question on RTI has provoked the greatest declaration of lack of knowledge by our respondents, 51%! The comments seem to suggest a level of hope more than confidence that the HMRC timetable will be met by all. The comments also show that companies have been putting more resources into other recent or approaching deadlines.


n For an issue that wasn’ton most companies’ radar a year ago, I’m not sure how everyone will have fitted it in alongside other priorities such as RDR, AE, etc.n I’m not sure of the readiness of all providers, however, anecdotal evidence suggests that some providers will struggle to meet deadlines

0

10

20

30

40

50

10%Strongly Agree

46%Agree

24%Neutral/I don’t know 20%

Disagree

0%Strongly Disagree


18HMRC’s RTI (Real time Information) will be fully rolled out during 2013 and compulsory for all payroll and annuity providers. This has been a well managed issue across the industry and all providers will be RTI compliant in time to meet the deadlines?

We will see further specialism within the annuity space

Two thirds agreed that the annuity market offers the potential for new entrants or specialists. An ability to mitigate longevity risk was seen as key to supporting new entrants. With the current low level of gilt yields and Solvency II around the corner, you would expect possible new entrants to the industry to be reconsidering, but this shows that is not the case and the comments show an expectation of growth and innovation.


n I feel that ABI code of conduct and other issues may see some smaller providers, who use inertia to support an uncompetitive rate, withdraw from the market.n I agree, although the risk management capability to operate safely and successfully in the annuity market is significant.n We will see further specialism within the annuity space as a result of greater competition rather than an increase in the number of annuity providers.

For an issue that wasn’t on most company’s radar a year ago, I’m not sure how everyone will have fitted it in alongside other priorities such as RDR, AE

For the second year in a row, a question on RTI has provoked the greatest declaration of lack of knowledge by our respondents, 51%! The comments seem to suggest a level of hope more than confidence that the HMRC timetable will be met by all. The comments also show that companies have been putting more resources into other recent or approaching deadlines.


n For an issue that wasn’ton most companies’ radar a year ago, I’m not sure how everyone will have fitted it in alongside other priorities such as RDR, AE, etc.n I’m not sure of the readiness of all providers, however, anecdotal evidence suggests that some providers will struggle to meet deadlines

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2%Strongly Agree

20%Agree


27%Disagree

0%Strongly Disagree

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Equiniti Annuity Industry Survey 2013 · 2013-06-20 · Equiniti Paymaster’s annuity brochure is available on our brand new website – For more information Equiniti Paymaster is