Third way variable annuity sales are close to £450 million in the first half of 2010, an increase of 34% compared to the 2nd half of last year, according to research by consultants Towers Watson. The value of these variable annuity sales changed little between the first two quarters of this year, at £222 million and £223 million respectively. Andy Sanders, from Towers Watson, stated that it is encouraging that there has been an increase in sales compared to the second half of last year, adding that those sales were much reduced relative to the first half of last year, prompted by product redesigns and the exit of the Hartford from the variable annuities market place as a result of the impact of the financial crisis.
According to Towers Watson, third way annuity products could be appropriate for a sizeable segment of consumers both approaching and actually at retirement and therefore present a significant commercial opportunity for various product providers. Andy Sanders said that currently, reaching the 2008 and 2009 billion pound of sales of variable annuities is looking challenging for this year. A variable annuity is a unit-linked investment product with built in explicit guarantees, and is currently available from a small number of product providers, either as a pension or as a life assurance bond. The products vary in the way they are constructed and to the type of consumer they appeal to and when available in a pension wrapper they are usually designed to provide regular payments that are guaranteed not to fall, but may also rise if investments outperform.
