Leading IFA, Intelligent Pensions, has raised concerns about direct annuity business; the situation where an insurer steps into the market to write more annuities directly with consumers. They argue that pensioners may struggle to select the most suitable retirement option without advice. It was recently revealed that Aegon is creating Aegon UK Direct to do just this and this has sparked off the concerns.
The Aegon UK Direct proposition will be to sell standard annuities themselves and enhanced annuity business from an as yet unnamed specialist provider. Aegon is following L&G who have their own “no advice” annuity service, which is also extended to include enhanced annuities. L&G do state that their Annuity Solutions service is actually proving to be very popular and they claim that there is a demand from consumers who feel confident enough to buy direct.
However, the Intelligent Pensions director, David Trenner suggests that being confident enough to buy a pension annuity and understanding all of the issues that are involved are two completely different things. He added that many IFA’s do not specialise in advising on this area of business and struggle with the complexities, so what chance do untrained retirees have? He even suggests that it might be the case that the likes of these two companies are looking to increase their profits by cutting out the cost of advice?
An Aegon spokesperson commented that, as Aegon is an owner of leading IFA firms, and a key player in the annuities market, they recognise how valuable advice is when consumers are looking to arrange their retirement income. At Aegon Direct they are looking at how a service offering something of a basic level of advice, with leading annuity rates, could provide popular to affinity group customers, where this need has been clearly identified by both the consumer and the consultant. She added that this service would link in to services already provided through their IFA firm Origen, and where it is clear full advice is required, the consumer would be referred to Origen.