UK enhanced annuity sales rose to £3.02bn in 2011, an increase of 22% over 2010, according to research by Towers Watson. Second half sales in 2011 were £1.59bn.
The company says that consumer interest in taking out enhanced annuities-which provide bigger pensions for those with serious medical conditions or with negative lifestyle factors such as those linked to weight, smoking and occupation-is set to continue.
Andy Sanders, a senior consultant in the Insurance Management Consultancy team at Towers Watson, said "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."
There is however scope for enhanced annuities to reach a yet wider cross-section of those preparing for their retirement.
Sanders added "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."
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