LV quits the annuity market: experts say it was inevitable

 
Oliver Gill
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Many UK insurers are calling time on the annuities market (Source: Getty)

LV is the next big insurance name to flee the enhanced annuity market with immediate effect.

With annuity rates plummeting as the lower-for-longer interest rate environment persists, the announcement follows the earlier news that the insurer was reviewing its annuity operations.

Read more: Binning the government's annuity initiative: Here's what the experts think

“The writing was on the wall," said Hargreaves Lansdown's pensions guru Tom McPhail.

Unfortunately the combination of the pension freedoms, monetary policy and the capital reserving requirements imposed on insurance companies have driven up the cost of buying a secure income for life through an annuity.

We would like to see policy-makers in government working with regulators and the industry to look at ways to address this problem.

Read more: Prudential pulls back from the UK open annuity market

Earlier this month, Standard Life, who had not been an active player in the annuities market for some time, became the sixth provider to shut up shop since former chancellor George Osborne announced his wide-sweeping push for greater pensions freedoms.

Britain's external annuity exits

Company Closure date
Reliance Mutual July 2014
Friends Life (due to Aviva merger) April 2015
Partnership Assurance (due to Just Retirement merger) April 2016
Prudential June 2016
Aegon September 2016
Standard Life November 2016
LV November 2016

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