The insurer is to launch its variable annuity over the next few weeks, when it will become only the fifth provider of such products after Aegon, The Hartford, Lincoln and MetLife.
Variable annuities are currently expensive and their guarantees ‘flawed around the edges’ in the opinion of Hargreaves Lansdown, but the IFA anticipates charges falling as the market hots up.
Nigel Callaghan, pensions analyst at the firm, said: “The current offering of variable annuities are demanding a high price and still leaving investors exposed. We anticipate charges coming down as more providers step in, and we have already seen some movement in this area.
“Variable annuities need to demonstrate they can compete with a combined drawdown and annuity strategy in terms of cost, guarantees and simplicity.”
Other providers expected to join the market include Axa, Prudential and Hargreaves Lansdown itself.
The Annuity Bureau also saw Standard Life’s entry into the market as a positive move.
David Marlow, director at the Annuity Bureau, said: “We are keen on variable annuities, because we think inflation-linking through guaranteed annuities is very expensive and we are encouraging people to actively consider investment-linked solutions, which are now a good choice in the market.”
Current demand for variable annuities is limited but growing. DR
