Nest talks to online annuity provider

The Annuity Clearing House (ACH) aims to provide a low-cost annuity shop specifically for smaller retirement pots. Nest is widely expected to produce pot sizes of under £10,000.

Spearheaded by former Annuity Bureau managing director Peter Quinton and Rockingham Retirement managing director Steve Hunt, ACH will initially target the independent financial adviser (IFA) market before rolling out to trustees.

Hunt confirmed ACH has had “high level” conversations with the Personal Accounts Delivery Authority about possible plans to provide an annuity service for Nest members at retirement.

The online-only proposition saves IFAs time and costs, and allows advisers to offer several options for consumers searching for the best annuity.

IFAs will earn referral fees for all business transacted through ACH. Conventional annuities will produce 1.1% of the annuity price for the IFA, with-profits 1.4% and impaired and enhanced annuities will earn 1.7%.

Developed by ACH’s in-house technology experts, the average time to buy an annuity is under 10 minutes.

“This has been 18 months in development,” said Hunt. “What we can now offer is the ability to buy an annuity in seven minutes, or 12 to 14 minutes for complicated, impaired annuities.”

ACH has teamed up with MGM Advantage, Prudential and Legal & General to provide the annuities for smaller pots, typically around £10,000. The minimum level, however, is just £1,000.

“We’ll use the same providers for six months, then review to see if we want to add any more,” said Quinton. The service currently offers lifetime, impaired, with profits and temporary annuities, with fixed-term annuities to be added later.

There are also plans to move towards allowing e-signatures to further streamline the process.