The National Employment Savings Trust (NEST), product development, Solvency II and the Retail Distribution Review (RDR) have the industry split, according to Xafinity Paymaster's latest annuity survey.

Results from the inaugural study, Annuity Industry Survey 2010, shows that the industry is split down the middle when it comes to whether the removal of compulsory annuitisation at age 75 would increase the risk of the majority of annuity policyholders 'running out of money'.

The introduction of Solvency II was another grey area, with 37 per cent of respondents agreeing that it would result in the cost of a lifetime annuity being too expensive for most members with defined contribution (DC) arrangements. Forty-five per cent disagreed.

Some participants said prices already reflect the potential threat that the directive brings, and others see poor value in a lifetime annuity at retirement. Niche annuity providers were viewed as the most vulnerable to the effects of Solvency II.

Almost two thirds (64 per cent) supported the view that the range of annuity products that already exist, along with drawdown and ASP, will adequately meet the needs of the UK market for the next five years. Almost a quarter (22 per cent) disagreed.

The Government's power to dramatically improve the annuity landscape and consumer perception if they allowed non-utilised pension capital to be included within a deceased annuitant's estate versus being retained by insurers as profit was recognised by more than 55 per cent of respondents, but 39 per cent disagreed as these benefits come at too high a price.

"The 2010 Xafinity Paymaster Annuity Industry Survey has revealed an underlying need for improved consumer advice when people make decisions regarding the use of their accumulated pension assets," commented Keith Boughton, director of insurance and payroll. "The last few months have seen the launch of a number of new annuity products from many insurers but annuity industry insiders who responded to the survey have stressed that it is improved advice that is needed, not necessarily more products."

Sixty-seven per cent of participants rejected the idea that there will need to be a government-supported annuity provider to support the administration of the smaller annuity pots that will be created by NEST.

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