Prudentials pulls back from the UK open annuity market

Jessica Morris
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The logo of the Prudential insurance gro
Prudential said existing customers won't be affected (Source: Getty)

Prudential will no longer offer annuities on the open market and only make them available to existing customers, stoking concerns it will hit individuals' ability to shop around for the best deal.

The insurer said it'd stopped accepting applications for conventional annuities from non-existing customers though financial advisors on 17 June. It cited reduced demand following new pension freedoms rules which came into force in April 2015.

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It comes after the recent merger between Just Retirement and Partnership reduced the number of annuity providers on the open market, which lets savers choose between different deals to convert their pension pot into a fixed lifetime income.

Tom McPhail, head of retirement policy at financial services company Hargreaves Lansdown, said: "Our worry now is that with fewer annuity providers available on the market, more and more investors may end up bypassing the shopping around process and simply buying an income from their existing provider."

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"Since the launch of pension freedom, more and more investors are arranging their income directly with pension providers, without taking advice. It is imperative therefore that everything possible is done to help them find the best possible deal."

A Prudential spokesperson added: "“Our existing annuity customers who currently receive regular retirement income payments will not be affected by this decision.”