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Canada Life have agreed to buy specialist annuity provider Retirement Advantage for an undisclosed sum.
Number of annuity providers active in the open market now down to six.
Annuity rates down five per cent since pension freedom. In April 2015 a £100,000 pension bought a 65 year old a single life, level annuity of £5,447. Now it is £5,166 (source: HL Annuity Calculator).
Nathan Long, senior pension analyst at Hargreaves Lansdown, said: “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.
“Annuities still have a huge part to play in retirement and we continue to believe that most people will benefit from some form of secure income like an annuity or final salary pension in retirement to cover any essential spending.”
Active annuity providers and those that have left
The following providers are still active:
- Aviva (standard and enhanced)
- Canada Life (standard and enhanced)
- Hodge Lifetime (standard rates only)
- Just Retirement (enhanced rates only)
- Legal & General (standard and enhanced)
- Scottish Widows (standard rates only)
The following providers have pulled out of the open market in recent years:
- Partnership (merged with Just Retirement)
- Standard Life
- Friends Life (merged with Aviva)
- Reliance Mutual
- Retirement Advantage