Insurance firms face pounds 14bn bill

INSURANCE COMPANIES are facing a pounds 14bn bill to pay for guaranteed annuities offered to pension customers in the past - at least pounds 4bn more than was previously thought. Standard & Poor's, the credit reference agency, said a survey of life insurers showed the sector would have to set aside pounds 14bn in reserves because of stricter-than-expected guidance on the issue from the Government.

Guaranteed annuities, offered to hundreds of thousands of private pension savers between 1963 and 1995, promised a minimum rate of retirement income from pension savings. The cost to insurers is much higher than paying a normal annuity under current market conditions.