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Enhanced annuity sales grow to record levels

Enhanced annuity sales grow to record levels

Category: Annuities

Updated: 27/02/2012
First Published: 22/02/2012

MONEYFACTS ARCHIVE
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Sales of enhanced annuities grew to record levels last year and increased by almost a quarter compared with 2010.

Enhanced annuity sales in the UK totalled £3.02 billion in 2011, with £1.59 billion coming in the second half of the year.

It is a vast improvement on the previous 12 months when sales were £2.47 billion, while the figures from Towers Watson show that sales have increased almost threefold in the last four years.

The annuities were only introduced in the UK in 1995 with annual sales hitting the £1 billion barrier for the first time in 2007 (£1.09 billion).

A decade ago, yearly sales of enhanced annuities amounted to £419.6 million.

Enhanced annuities provide bigger pensions for those with serious medical conditions or with negative lifestyle factors such as those linked to weight, smoking and occupation.

And it seems that increasing sales of enhanced annuities are set to continue.

"2011 was another record year for enhanced annuity premiums, with many thousands of consumers benefiting 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 of Towers Watson.

"Enhanced annuity sales were around 15% of the total annuities sold to consumers in 2011, yet the current range of medical conditions and lifestyle factors that can lead to enhancements suggests a greater proportion of retirees could benefit.

"Greater use of the open market option at the point of annuitisation would undoubtedly drive this percentage higher."

What next?

Read more about annuities:
Guide:
How to choose the best annuity
Guide:
What are Enhanced Annuities?
Compare Annuity Rates

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