Canada Life Group has reached an agreement to acquire the annuity and retirement product specialist Retirement Advantage in a sign of further consolidation in the annuity market.

Bristol investment firm Hargreaves Lansdown has commented that the move cuts the number of open market UK annuity providers to six and does little to help boost competition in the shrinking but still important annuity market.

Hargreaves says the only six open market providers still active are:

·         Aviva (standard and enhanced)
·         Canada Life (standard and enhanced)
·         Hodge Lifetime (standard rates only)
·         Just Retirement (enhanced rates only)
·         Legal & General (standard and enhanced)
·         Scottish Widows (standard rates only)

HL says the providers who have pulled out include: Aegon,  LV=, Partnership (merged with Just Retirement), Prudential, Standard Life, Friends Life (merged with Aviva), Reliance Mutual, B&CE and Retirement Advantage.

Nathan Long, senior pension analyst at Hargreaves Lansdown , said: “Another annuity provider bites the dust, as the impact of the new pension freedoms continues to be felt. We have not seen Retirement Advantage offer particularly competitive annuity rates for some time, so whilst we don’t expect annuity rates to be impacted in the short term, it is still disappointing that another provider has left the market and long term this cannot help competition, something we know the FCA is currently concerned about.”

“Annuities still have a huge part to play in retirement and we continue to believe that most people will benefit from some form of secure income like an annuity or final salary pension in retirement to cover any essential spending.”

Retirement Advantage was created in 2015 when funds managed by TDR Capital LLP merged the retirement income and equity release divisions of MGM Advantage and Stonehaven. The company has 30,000 pension and equity release customers, and more than £2 billion of assets under management including a £1.5 billion block of in-force annuities (as of June 2017). The terms of the deal have not been disclosed.

Retirement Advantage’s roots date back to 1852. In 2015, the business rebranded and started trading as Retirement Advantage following the merging of the retirement income and equity release divisions (previously trading under the MGM Advantage and Stonehaven brands).

Doug Brown, executive vice-president and chief executive, Canada Life U.K., said “Canada Life has operated in the UK since 1903 and is a highly regarded provider of retirement income, investment and employee protection solutions. This transaction enhances our position and broadens our product suite to include equity release mortgages.”

Craig Fazzini-Jones, group chief executive, Retirement Advantage, said, “This acquisition is a positive endorsement of the business plan we adopted following the UK pension reforms announced in 2014 that transformed our business and drove the creation of innovative retirement solutions.

“As we join Canada Life, we will be well positioned to build upon that success and provide greater retirement protection for our customers.”

The transaction is expected to be completed by the end of the year and is subject to regulatory approvals.