By Jamie Dunkley
Billions of pounds were wiped off the value of Britain's life insurers after the Chancellor unveiled "game-changing" reforms to the UK pensions market.
From April next year, retired workers will be handed more freedom on what they do with their pension pots. No longer will they have to buy an annuity – instead they'll be able to invest their cash as they wish.
Shares in Legal & General, Aviva, Standard Life and Prudential all fell heavily on the London Stock Exchange after the announcement was made. Partnership Assurance, which specialises in providing annuities to people who are ill, tumbled 55 per cent while its peer, Just Retirement, was down 42 per cent.
Read more: The Independent's Budget coverage in full
Phil Smart, the UK head of insurance at KPMG, said: "This represents a massive shake-up for the pensions and annuity industries. It will require a fundamental shift in the strategies and business models of annuity providers – one of the few remaining areas of the UK life industry, which has remained active in recent years. Annuity businesses will need to adjust to an environment where volumes of new business could be considerably lower than previously expected."
The news wasn't all bad for UK companies with financial advisor Hargreaves Lansdown climbing 14.4 per cent. Experts said the rules could benefit consumers. Malcolm Kerr, executive director at EY, said: "The changes to rules on pensions will be very liberating for consumers. There's nothing fundamentally wrong with annuities but at current interest rates they have seemed pretty poor value so the flexibility for consumers to choose an alternative is welcome."
Source Independent
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