Pension annuity sales seem to be on track for a record year, particularly in the type of contract and increased rates available to those with medical conditions, taking prescribed medication, and for those who smoke on a regular basis. The message seems to be getting through, at long last.
Sales of enhanced annuities rose to £448 million in the second quarter of this year, bringing the total sales in the first half of 2009 to a pretty hefty £891 million. Should these products, also sometimes known as impaired life annuities, maintain their current and growing level of popularity, sales for 2009 would come to about, and this is a lot more than the record sales of £1.4 billion last year, according to leading consultants Watson Wyatt’s research.
The enhanced annuity contract was first introduced to the UK market in 1995 to provide bigger pension incomes to people with serious medical problems or negative lifestyles, such as obesity and smoking. Now. these contracts make up almost 30% of all those sold in the UK. Their continued growth means that more and more retirees are benefitting from better pension incomes because their medical condition or their lifestyle has been taken into account and a lower than average expectation of life in retirement anticipated, stated Andy Sanders, a senior consultant with Watson Wyatt.
The enhanced annuity rates available to retirees who qualify can make quite a difference to a retirement income, and can be worth an extra 75/80% in some cases. Unfortunately, a survey conducted earlier this year discovered that UK retirees are missing out on a combined sum of £56 million woth of retirement income by not taking advantage of these rates, and about 150,000 people could boost their retirement income by purchasing one rather than a contract with standard annuity rates.
