Retirement Advantage has confirmed it is to stop selling standalone annuities, following its acquisition by Canada Life.

The company currently offers two guaranteed annuity products, a standalone annuity and an annuity which is sold within a drawdown wrapper, the latter which it still plans to offer.

A spokesperson for Retirement Advantage confirmed that following the acquisition by Canada Life, it has reviewed its product set and decided to withdraw the standalone annuity from the market, as Canada Life has a direct equivalent.

“Going forward we will continue to offer an annuity within our drawdown product as there are significant differences between an annuity held within a drawdown wrapper and a traditional standalone annuity,” a spokesperson said.

“Our drawdown annuity will continue to be fully underwritten and offer competitive rates, a wide range of death benefits and income escalation, with additional tax advantages and flexibility. We have ambitious plans to develop The Retirement Account and will update advisers as we move through the year.”

Retirement Advantage’s departure from the market marks the eight company that has stopped selling annuities since 2014, the same year that former Chancellor George Osborne announced the pension freedom reforms. These others are; Aegon, LV=, Partnership, Prudential, Standard Life, Friends Life and Reliance Mutual.

Commenting, Hargraves Lansdown head of policy Tom McPhail said Retirement Advantage was a “relative minnow”, accounting for only a few percent of annual market turnover.

“Given the collapse in demand for annuities since pension freedom was announced in 2014, it is hardly a surprise we have seen so many companies leave the market. This isn’t though a case of ‘last one out turn off the lights’; recent research by Hargreaves Lansdown indicates we may see an upsurge in annuity demand around 10 years from now as the baby-boomers move into later retirement.

This in turn could tempt more providers back into the market. It is also worth noting the market share of all the providers who have quit since 2014 is only around 20 per cent, so competition hasn’t been as adversely affected as might be supposed.”

Before the pension freedoms were introduced annuity sales were running at around 350,000 a year, whereas today they have dropped to around 80,000 a year.

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