Standard Life has re-entered the annuity market as annuity rates rise and demand for annuities surges.

The Phoenix Group group company says the Standard Life Pension Annuity will meet a need for “certainty and security” in the retirement income market.

Research for Standard Life in 2022 found that certainty of income in retirement was important to 78% of people and 58% worry about running out of money in the future.

The annuity is available on the open market to new and existing Standard Life customers. It is aimed at customers aged typically between 55 and 75.

It is available through both advised and non-advised routes, including industry quote comparison portals and leading specialist annuity brokers.

There is an Open Market Option (OMO) or Immediate Vesting Personal Pensions (IVPP).

The minimum premium is £10,000 (after PCLS/adviser charge) with no maximum.

Financial Planning Today asked Standard Life for a sample annuity quote. For a £100,000 premium for a 65 year old (Single life, average postcode, monthly in advance, no guarantee / protection, level annuity, healthy life) the Standard Life Pension Annuity would currently pay £7,008 per annum.  

Claire Altman, managing director for individual retirement at Standard Life, said: “It is an exciting time to be launching a new guaranteed income product on the open market. Annuities are increasingly better value, with current rates improving by 20% in the last twelve months, as of June 2023.

“In an uncertain economic climate, in which three quarters of people say they want income certainty in retirement, the guaranteed income offered by an annuity is likely to be an ideal solution for many. I think people are beginning to see this value, with the first quarter of this year proving to be the highest quarter for annuity sales since the Pension Freedoms.”

The annuity is medically underwritten allowing those suffering from lifestyle and/or medical conditions get more income. It offers inflation-linked options, and value protection, which provides a death benefit to a customer's family.

Customers can also consider buying a guaranteed period for up to 30 years, which secures a regular income for a customer’s beneficiaries or dependents in the event of death.

Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “Standard Life’s re-entry provides a welcome boost to the annuity market and gives further choice to those in need of a guaranteed income in retirement. We saw provider numbers fall as the combination of Freedom and Choice and more than a decade of low interest rates decimated annuity demand.

"However, the surge in annuity rates we’ve seen over the past 18 months has reinvigorated the market. At HL we’ve seen the number of quotes generated by our annuity search engine surge by more than 120% between Aug 21-July 22 and Aug 22-July 23."

"Increased competition from such a well-known name should help drive higher incomes for retirees and benefit the annuity market as a whole.”