We learnt today that Partnership and Just Retirement, two leading providers with respect to pension annuities, are to merge. This actually has a more significant impact, in my opinion, on the long-term care fee planning market than pension annuities.
What are immediate need care fee payment plans?
These plans are a type of annuity contract, but purchased from personal money (typically equity released from the sale of a home, but not necessarily), as opposed to a pension. Just like a pension annuity this a form of insurance where a regular income is provided in exchange for an upfront lump sum investment.
We typically recommend them, as part of a ‘whole of market’ solution, to provide a guaranteed income for life to pay for care costs. We see the benefit as being a known cost (albeit through full or partial loss of capital), to secure a fixed income that will invariably protect a loved one from being forced to leave residential care.
Why does the Partnership and Just Retirement merger matter?
Accepting that an immediate needs annuity is just one potential solution to fund for care (investment returns, and/or capital withdrawals being two others), the market is already restricted.
It’s only just two years ago that Just Retirement joined the market in immediate needs annuities. Up to this point the main providers were Friends Life (now purchased by Aviva, previously they were AXA) and Partnership Assurance. The merger brings the number of providers to two again.
Wingate Financial Planning are independent, whole of market, Chartered Financial Planners, and therefore we care deeply about the functional and competitive provision of care annuities. I specialise in this area, and whilst we will always commit to provide an appropriate solution, and drive down the cost of a fixed income, we welcome as many competitors as possible.
Given long-term care is an ever-growing sector of financial planning it seems, in many respects, bizarre that we have less choice today than in recent history. We hope that other insurers see the growing opportunity and seek to compete with the two incumbents.