Fidelity Life has revealed that it is exiting the annuities market and will no longer offer the products by the end of the year.

It was the last provider to do so.

Chief executive Milton Jennings said there was little interest in annuities. “I wouldn’t buy an annuity product myself, so why should we expect others to?”

But Michael Littlewood said there was a need for annuities, particularly for middle-income people. He said lower income people could not afford them and wealthier people did not need to bother but middle-income people had a serious dilemma in making a lump sum last from retirement until they died. “It’s quite a big issue.”

He said the New Zealand market was small and relatively risky for providers. “The Government is going to have to get its hands on the market in some way and facilities on some basis the design, development and delivery of annuities.”

He said it could be linked to aged care requirements.

Littlewood’s organisation has also panned proposals for a “flexi-super” arrangement, in which people could choose to take a lower pension at 60, or a higher one at 70. He said people would lose out in such a situation, although they would likely not be investment advisers’ clients.

Poorer people would choose earlier, lower pensions and also would generally not live as long. People who were on welfare benefits would be especially vulnerable as the government would want to shift them on to super.

“Advisers will be talking to people who have enough control of that part of their lives and are actively saving. My guess is those sort of people are more likely to choose a later starting age under flexi-super and have a longer life expectancy.”