British demand for guaranteed pension annuity products is expected to rise. There is therefore likely to be a greater demand for pension annuities which offer guaranteed rates…as stated by a top executive at Aegon. Investors are turning cautious in the wake of a slump in equities markets.
“What will happen is people will start coming back into the investment market now that the market has stabilised. We are beginning to see activity pick up in the guaranteed products,” Aegon UK’s Chief Financial Officer Mark Laidlaw told Reuters. There has been recent stability in stock markets and this could improve investor sentiment. He continued, “Equity market volatility is the single biggest driver of investor confidence. I think we have seen some stability now. I think that will help.”
Aegon UK, which owns Scottish Equitable and some independent financial adviser firms, competes with Standard Life, Aviva (Norwich Union), and Legal & General in the UK’s £850 billion pension market which is growing at the rate of about 8 percent annually.
People have started to realise that markets don’t go up necessarily, and as a result they have more interest in guaranteed products. A conventional annuity usually provides a fixed level of income for life, by locking into gilts and high-quality corporate bonds, when an individual exchanges pension saving for a regular income stream. For the time being it is proving popular. There are alternatives which should be explored before you make that important annuity purchase.
