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Annuity sales on course for record year

Annuity sales on course for record year

Category: Annuities

Updated: 13/08/2009
First Published: 13/08/2009

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Sales of enhanced annuities rose to £448 million in the second quarter of 2009, bringing the total sales in the first half of the year to £891 million.

Should the products, also sometimes known as impaired life annuities, maintain their current level of popularity, sales for the year would come to around £1.8 billion – easily beating record sales of £1.4 billion last year, according to Watson Wyatt.

Enhanced annuities were first introduced to the UK in 1995 and provide bigger pensions to people with serious medial problems or negative lifestyles, such as weight problems and smoking.

Today, enhanced annuities make up almost 30 per cent of all annuities sold in the UK.

"The continued growth of the enhanced annuity market means more consumers are benefitting from higher pension incomes because their medical condition or lifestyle has been assessed and a lower than average expectation of life anticipated," said Andy Sanders, a senior consultant at Watson Wyatt

However, he warned that as the market grows, there would be implications for those that do not qualify for an enhanced annuity

"This pool of lives will be increasingly healthier and have longer expectations of life that need to be reflected in reductions to the level of pensions income that can be offered," he said.

A survey conducted earlier this year found that UK retirees are missing out on a combined sum of £56 million by not taking advantage of enhanced annuities, and around 150,000 people could boost their retirement pot by purchasing one rather than a standard annuity.

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