Sales of variable annuities, a relatively new type of retirement product to the UK, have more than doubled in the last year, latest research has revealed. According to Watson Wyatt, the variable annuity market grew to more than £1.1 billion last year, up from £539 million in 2007. The number of policies sold also rose by more than 80% from 7,775 to 14,128 over the same period. Sometimes known as third way annuities, variable annuities are unit-linked investment products with explicit guarantees. The products vary in the way they are put together and to whom they appeal. When available in a pension wrapper, they are usually designed to provide regular income payments that are guaranteed not to fall but may also rise if investments perform well. Because of their complex nature, all sales are currently made through independent financial advisers. Increasing adviser and consumer familiarity with the products available are said to have played a part in their rising popularity, while the turbulent market conditions have increased the appeal of their underlying investment guarantees.
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