Annuities will continue to be an important part of retirement planning and Partnership, whose shares slumped more than 55% on the day of George Osborne’s speech, will adapt to the changes, Chris Gibson-Smith wrote in an update to shareholders.
Budget 2014 announced a number of changes affecting pensions flexibility, including savers’ right to withdraw from defined contribution pension funds at the marginal rate of tax.
Gibson-Smith said that, though there is potential for the overall market for annuities to contract, the changes may also prompt a larger number of people to purchase an annuity via the open market option.
“The changes may lead to the company reviewing its strategy and business model in due course, but at this stage it is not possible to say with any certainty what the medium term and long term impact will be,” Gibson-Smith (pictured) wrote.
Partnership announced in its 2013 annual report and accounts that it welcomed more than 22,500 new annuity customers last year and that the number of Partnership annuity policies stood at almost 110,000, from 88,000 the previous year.
Earlier, in March, the group announced pre-tax profits of £83m in 2013, up from £67m in the previous 12 months.
Gibson-Smith said on Wednesday that Partnership will work with the industry, regulators, politicians and key stakeholders to inform the upcoming policy debate about retirement planning.
“The debate that is now starting around pension choice and flexibility will highlight the positive benefits that annuities can bring to people who want to convert capital accumulated in potentially volatile equity markets into a predictable and secure income for life – and particularly for those with health and lifestyle conditions.”
Gibson-Smith continued: “Whatever the outcome of the consultation, we are confident that there will still be a need for Partnership’s expertise and our ability to offer retirees the peace of mind and financial security that they seek.