Standard Life has opened up its retirement product range to customers with a smaller pot of pensions savings, a day after the Chancellor's pension reforms triggered a sell-off among life insurers.
The annuity and pension provider is allowing customers with £30,000 of pension savings to access its income drawdown range Previously, those with less than £50,000 were excluded.
Standard Life head of customer consolidation Alastair Black said the product allows pensioners flexibility: “By using drawdown, they can take an income that supports their needs in retirement, while ensuring their pension pot remains invested.
"Then, when the pension rules change, they can then review their strategy."
However, more flexibility increases the need for professional financial advice, he added.
Standard Life was among the life insurers and pension providers which saw shares tumble after George Osborne said the rules on investing in annuities would be relaxed.
Annuity provider Just Retirement group plummeted 32%, while Partnership Assurance Group, a provider of non-standard annuities for individuals with medical conditions, shed 43%.
Standard Life, Prudential and Aviva all fell by between 2% to 4%.
Legal & General shares fell by 12% after the announcement. In a market notice the firm hinted at a focus on drawdown products: "Legal & General is well-placed to continue to develop a product suite that includes good-value drawdown and protection against longevity risk as well as provision of investment income."
Today providers told Investment Week the changes will lead to a more competitive annuity market.
Just Retirement director Steve Lowe said the promise of advice at retirement is likely to lead to retirees hunting more widely for an annuity, which in turn will lead to consumers finding better rates.
Those with the smallest pension pots may decide to abstain from an annuity altogether, he added.
However, he dismissed the idea of any immediate changes to his firm's range: "We are always on the search for better ways to help customers meet their needs. But not as a result of 24 hours of dust in the air."
Partnership corporate affairs director Jim Boyd said: “If we do see the market working effectively and efficiently, we will see more and more people checking around.”
In his Budget, Osborne said limits on income drawdown and flexible drawdown would be reduced and trust would be handed over to savers. He told MPs: "No-one will have to buy an annuity."
However, Threadneedle's head of equities Leigh Harrison said life companies are likely to be less affected than the initial dive in share prices suggested: "The leading life companies have well diversified business models in which the new business from individual annuities represents a relatively small part of their overall cashflow."
Schroders UK equities manager Jessica Ground said many individuals will continue to buy annuities: "The government clearly will not want a situation where people do not buy annuities and then run out of income during their retirement.
"The immediate reaction may seem as though it is Armageddon for the annuities market, but it is likely to take some time to work out the details."
