Retirees embracing enhanced annuities

Category: Annuities
Date: 3/9/2010

More retirees than ever appear to be making the most of their pension benefits, after it was revealed sales of enhanced annuities in the UK rose to a record high last year.

According to Towers Watson, sales of enhanced annuities, which provide bigger pensions for those with serious medical conditions or with negative lifestyle factors such as weight, smoking and occupation, amounted to £1.79 billion in 2009, an increase of 24% on 2008.

As a percentage of total pensions annuity sales, it means enhanced annuities have more than doubled their market share since the research first began in 2001 to almost 17%.

It was also claimed that consumer interest in taking out enhanced annuities, also sometimes known as impaired annuities, was set to continue.

Sales in the fourth quarter of 2009 reached a new high of £478.8 million, significantly up from third quarter sales of £415.8 million.

"2009 was another record year for enhanced annuity sales and means more consumers are benefiting from higher pension incomes because their medical condition or lifestyle has been assessed and a lower than average anticipated expectation of life," said Andy Sanders, senior consultant at Towers Watson.

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