Legal & General Share News (LGEN)

FTSE 100 Legal & General (L&G) on Wednesday issued a statement admitting that the changes to the annuity market announced in Chancellor George Osborne's Budget would have 'far-reaching consequences'.The group said the impact would be felt in the accumulation and decumulation of pension savings for individuals who need a secure income in retirement. "For consumers there will be greater choice and the need to make bigger decisions about their retirement provisioning. For Legal & General, our comprehensive suite of individual retirement solutions including protection, drawdown, DC funds, Unit Trusts and ISAs will ensure that we are well-placed to service successfully these choices and decisions," it said. "The changes, which affect individual annuities only, represent a further transfer of risk - the government is effectively transferring longevity risk, or the risk of outliving pension savings, to the individual. We expect that savers will therefore increase provisioning for their retirement." The group explained that pension 'pots' will now become more accessible, but that the reforms have no effect on the fundamental issue for the UK, which is that pension savings remain too low. "We expect pension savings, and hence the total pool of DC pension savings assets to grow," L&G continued. "To avoid individuals over-spending in early retirement and running short in later retirement, contribution rates into pensions, including via auto-enrolment need to rise and, in the absence of guaranteed lifetime incomes, the time spent in retirement needs to be shortened."It called on the government to bring forward the planned higher contribution levels under auto-enrolment, institute a "fairer, less regressive" tax regime for the accumulation phase of pension saving, and accelerate the rise in the retirement age. "Wednesday's introduction of greater flexibility extends the choice that is already available to wealthier pensioners to all savers, for example through providers including Legal & General's Suffolk Life. Greater flexibility, however, also creates greater responsibility. People are living longer, and it is more important than ever that retirees do not exhaust their pension savings during their lifetime, potentially at the point when they start to incur care costs." The group said it was 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. It explained its Retirement Solutions business is broad-based, with £21.1bn out of a total of £34.4bn annuity assets derived from corporate transactions, which are outside the scope of the new regulations. It also told investors that its cash guidance of operating cash of £290m (2013: £260m) for the division given at its preliminary results on March 5th for 2014 remained unchanged.The group's share price slumped 8.24% to 211.50p just before the close Wednesday, NR