In sharp contrast to many in the financial services industry, Hodge Lifetime’s Jon King says this year  is a year of great opportunity for the company. They are privately owned, well capitalised and are a company in the equity release market where competition is reducing. Indeed, they see a new offering of pension annuities as a step forward in the growing at-retirement market.

Last year’s figures were down on the previous year but still good compared with other businesses.

One of King’s ambitions is to make a difference to people and he really feels that he has made a difference because the equity release products that clients now buy are far better than in years previous.

Many at-retirement or post-retirement products will be in increased demand, that is why Hodge Lifetime changed it’s name from Hodge Equity Release, to allow it to expand the business into other product areas.

They have just launched a pension annuity offering, to give people increasing choices with annuity quotes via their open market options. They do plan for two or three new equity-release products this year and it is in their minds to launch a protected rights annuity.

Their annuity contracts are one of the many pension options you have at retirement that can be advised on by Origen.

The Government is expected to come under renewed pressure to provide compensation to the thousands of Equitable Life annuity holders who lost up to half of their hard earned savings when the  mutual nearly collapsed.
 
Sources understand that the Public Administration Select Committee (PASC) scheduled a last-minute hearing for Thursday this week to look into the Government’s poor response to Parliamentary Ombudsman Ann Abraham’s pretty damning report into Equitable Life.

The Government did agree ten days ago to Ms. Abraham’s recommendations that it pay compensation, though fears have now mounted that many annuity holders will not qualify for any payout as means testing could be utilised. Equitable was forced to shut down to new business in 2000 after being unable to pay guaranteed annuities. It offered guaranteed annuity rates it simply could not afford.

The PASC has already looked hard into the Ombudsman’s report. It is believed the PASC is now looking to discuss Equitable once again, following many complaints that there are people that will not qualify for compensation.

Further debate is likely on this debacle, and it is likely to focus around the Government’s refusal to take on board Ms Abraham’s report in full.

The mounting cost of hedging is forcing variable annuity providers, including Lincoln and The Hartford, to review their product charges to try to recover some of those costs. Another provider, Aegon, has already increased its variable annuity pricing. These annuity contracts are, of course, only one of many pension options open to you.

As markets tumble around the world and more customers take up their guarantees, providers such as these face a bit of pricing dilemma that could threaten the attraction of variable annuities.

If you are a variable annuity manufacturer you face the problem of having to pay more for financial engineering in these products and then cutting either your profit margin from the product or charging it to the client. Should charges increase noticeably variable annuity contracts will not sell.

These third way annuity providers are starting to feel the real costs of expensive hedging strategies and are reviewing their product charges to decide whether the excess costs they are incurring should be passed on to customers.

Nomura stated that if insurance companies don’t go back to pushing, rather than just offering, investment guarantees, they risk squeezing themselves out of the value chain for contracts such as savings, pensions and pension annuities.

If you are considering an option to a pension annuity, talk to Origen, they can advise you properly on the matter.

Some of the UK’s largest insurance companies are believed to have had a meeting with Treasury to discuss their concerns about the impact that any further nationalisation of any UK banks could have on their important corporate bond holdings.
 
These insurers own around £160bn-worth of these corporate bonds, with the majority being issued by financial institutions, according to Cazalet Consulting, usually to support insurers’ with-profits and pension annuity business. Insurers are believed to have a great deal of concern about their exposure to UK banks through these bonds.

The Financial Services Authority (FSA) has already allowed insurers some flexibility on meeting their individual capital guidelines in certain scenarios so they don’t have to sell assets in a falling market.

The insurance companies are understood to be lobbying for bondholders to be pushed further up the creditor hierarchy in the event of bank nationalisation.

One expert said that the insurers are asking the Government not to let these bondholders lose out but instead make us, the taxpayers, fork out for these bonds when in the markets they are worth little or nothing at all.

The Association of British Insurers (ABI) stated that corporate bond values are falling at the moment but insurance companies can and do withstand falls in their market price. They do not become suddenly illiquid in a crisis. Even when an insurer has come under pressure in past years, it has continued to pay claims due.

Cazalet Consulting have said that the banks have been issuing corporate debt, which has been bought up by insurance companies to back with-profits and pension annuities, so if there are any issues these companies are quite right to be concerned.

Let’s hope that there aren’t any issues here and that we can continue to find annuity quotes reflecting the best annuity rates. If that doesn’t work, we might have to consider other pension options instead.

You might have noticed, we have a growing annuity news section within this website. Every day I trawl around looking for news items that might be relevant to site visitors, and I publish on average three items per day. All sorts of issues are covered, from annuity quotes to annuity rates, and to life insurers latest sales figures.

That means there is a lot of information for you to take in, about annuities in general, as well as more specfic items. The newest items always occur briefly on the homepage and filter through to the annuity news page.

There is now a pretty large catalogue of items, over 750, and these are laid out as latest news, monthly news items, and categorised in subject matter. You can even put search items in, and you will get news items for the terms you have put in. Try ‘enhanced annuity’, or ‘income drawdown’ to see for yourself.

Not only do we aim to provide you with a lot of detailed and relevant information, we aim to deliver a service that counts, and one that you can rely on. That is why we have chosen Origen as our partner in this venture. As a multi award winning national IFA firm they are well placed to give you independent and accurate advice.