The annuity product market is in dire need of innovation, and it is time flexibility for consumers came to the fore, says Living Time's Dave Harris.

The sales and marketing director of the firm is concerned that the 1912 innovation of lifetime annuity remains applicable to 90 per cent of the UK population, and fears that with rates falling, now is not the time to be locking into an annuity.

His comments came in response to news that the Prudential has launched its New Income Choice Annuity, which, it says, provides customers with the flexibility to choose the level of income they wish to receive, have it reviewed annually, and change it every two years should they choose to do so.

Harris is unsure that the product is actually all that new. He is concerned that building this product on a lifetime annuity theme means people are locked into it for life, especially in today's volatile markets.

"Customer flexibility remains optimal - the focus needs to be on how we break down this lock in. The same is true of income in retirement. It is wrong that 90 per cent of consumers are still locked in. There is still too much inflexibility for the consumer."

As for the 'new' annuities on the market, Harris is doubtful that much more has been done but to remove the rather "unsavoury" with-profit label and replace it with a "new badge".

However, despite the glitches, Harris said he is impressed with the Prudential's positive move forward: "I welcome innovation and new ideas. It's great that big lifetime annuity providers are looking to innovate."

- Pensions Age March 2009

Share Story: