Enhanced annuities sales continue to break records
London - 2 September, 2010 - The value of enhanced annuity sales in the UK rose to £1.26 billion in the first half of 2010, an increase of 41 per cent compared to the second half of 2009, according to research by Towers Watson. According to the firm, new records for sales were set at £582 million and £676 million in the first and second quarters of 2010 respectively.
(PressZoom) - London - 2 September, 2010 - The value of enhanced annuity sales in the UK rose to £1.26 billion in the first half of 2010, an increase of 41 per cent compared to the second half of 2009, according to research by Towers Watson. According to the firm, new records for sales were set at £582 million and £676 million in the first and second quarters of 2010 respectively.
Andy Sanders, senior consultant at Towers Watson, said: "2010 looks set to be another record year for enhanced annuity sales, with every prospect of breaking the £2.5 billion threshold for the full year. This means more consumers are benefiting from higher pension incomes because their medical condition or lifestyle has been assessed and a lower than average expectation of life anticipated."
According to Towers Watson, consumer interest in taking out enhanced annuities – which provide bigger pensions for those with serious medical conditions or with negative lifestyle factors such as weight, smoking and occupation – is set to continue. Enhanced annuities, also known as impaired life annuities, make up over a third of all annuities sold (by premium volume) in the open market in the UK.
Andy Sanders said: "The continued growth of the enhanced annuity market has a number of ramifications. For those lives that do not qualify for an enhancement, average expectations of life are longer and need to be reflected in lower levels of pension income offered. Providers, whether active in the enhanced annuity market or not, need to carefully assess the mortality assumptions in their pricing to reflect the expectations of life of the consumers seeking their products."
Enhanced annuity sales in the UK
Year Sales (£ millions) 2001 £419.6 2002 £651.2 2003 £698.6 2004 £593.4 2005 £638.7 2006 £815.9 2007 £1,095.1 2008 £1,444.6 2009 £1,785.6 First half of 2010 £1,258.4
Notes to editors Enhanced or impaired life annuities were first introduced in the UK in 1995 and have rapidly gained a substantial market share of all annuities sold. They include: annuities enhanced for serious medical conditions; annuities for smokers; and annuities enhanced as a result of lifestyle factors such as weight or occupation. The survey covered nine providers of enhanced annuities: Aviva, Canada Life, Just Retirement, Legal & General, LV=, MGM Advantage, Partnership, Prudential and Reliance Mutual.
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