The fixed term annuity market is set to more than double to around £1bn a year by 2013, leading retirement specialists MetLife is suggesting. Dominic Grinstead, their managing director, has claimed the market would be driven by innovation and competition from various companies, estimating that currently somewhere between £350m and £400m of fixed-term annuity contracts are sold each year. Mr Grinstead said increasing concern about healthy longevity, the need for greater retirement income flexibility, and growing interest in alternative retirement solutions to the conventional annuity would boost the sector. MetLife estimates that around 75% of the current total lifetime annuity market falls within the ideal pension fund size for fixed-term annuities of between £10,000 and £100,000 – a pretty wide coverage – with people aged 60-65 buying 60% of annuities purchased in the first quarter of this year.
He stated that competition is increasing in the short term annuity market with new entrants and innovative new products being launched, and that is certain to drive growth over time, adding that clearly short term annuities, or fixed-term annuities, are not suitable for all retirees but they enable advisers and clients to make a choice based on their own set of circumstances now and then change their mind in the future as things change. Kim Lerche-Thomsen, of Living Time, which has a distribution partnership with MetLife, suggests that fixed-term annuities have established a strong market position since their launch back in 2006 and are a prime example of the innovation and flexibility that is required in the UK retirement market place. Living Time and MetLife are committed to expanding the market to offer different solutions suitable to as wide a range of clients and advisers as they can.
