When people talk about pension annuities what they generally mean is a level, single life pension annuity, whereas actually there’s so many different types of annuity. Most product areas will expand in the future. The pension annuity market’s quite odd in that you’ve got polarisation at the moment, you’ve got the conventional annuities at one end and unsecured income at the other end. With standard pension annuities, we’ve already seen providers come in offering weighting factors other than the standard age, sex and fund size. 

For years people have been saying there’s so much room for growth in the enhanced annuity market, but we need to raise awareness of it. Business volumes are growing now. There have been quite a few new entrants into the market over the last 12 months. The reasons for that, a lot of companies have actually been seeing a lot of their pension pots going to the enhanced specialists via the open market option. So by launching their own enhanced solutions they can actually retain some of that business, and also by the open market option actually win business, where potentially they’re actually losing cases each year. Last year for the first time the enhanced annuity market breached £1 billion. Other insurers will therefore develop into the market.

There is the possibility that the enhanced annuity segment as we know it will disappear shortly. At the moment we have a standard annuity, an enhanced annuity, an impaired life annuity, and a lifestyle annuity. However, these are actually all beginning to merge. What we’re going to have is a single annuity market which is going to be a lot more personalised.

Up to 40% of people could qualify for an enhanced rate? Yes, but only about 10% of people actually take one up. So a quarter of people are buying the standard annuity when they could be given enhanced rates.

Just Retirement sees a 12.8 per cent increase in pension annuity sales to £763.5m. Just Retirement are a specialist enhanced annuity and impaired life annuity provider in the UK. The group also reported a 5.2 per cent year-on-year drop in sales last quarter to £191.8m.

As well as pension annuities business, they also reported that over the full year equity release advances were up 27 per cent from £125.2m to £159m, but over the last quarter they were down 8.7 per cent year-on-year from £52.6m to £48m.

Sales of annuity policies were up 9.6 per cent over the full year to £604.5m, but down 4 per cent last quarter to £143.8m. Just Retirement estimates it has increased market share in the annuities market to 5.5 per cent and in the equity release sector to 14 per cent.

The company, and those behind this website, believe the FSA’s call for the fair treatment of annuity customers is likely to boost demand for enhanced annuities and while the pressure that the regulator is putting on providers to meet the Open Market Option rules and encourage customers to shop around will be beneficial to Just Retirement.

Chief executive Mike Fuller says: “I am pleased to announce that the company has reported another full year of strong sales growth delivered against a backdrop of challenging market conditions. Critically, we have increased our annual shares of the annuity and equity release markets through our product, technology, service and funding advantages.”

It is not often we are given guarantees; but we are with pension annuities. Whatever type of variation of a straightforward pension annuity, you get a guaranteed annuity rate. You know exactly where you stand, whether it’s a conventional annuity, an impaired life annuity, an enhanced annuity, a single life annuity, or a joint life annuity with spouse’s benefits. You get the idea.

However, take a with profits annuity, an income drawdown contract, or one of the new variable annuities where you have to rely on investment performance, then there has to be a big question mark with the current market volatility. You have to rely too much on the investment element of the contract for the whole thing to work to your advantage.

So go on, treat yourself to a guaranteed annuity rate. Rates are pretty good at the moment.

There are a few annuity companies with competitive annuity rates. Legal and General annuity rates are good. Norwich Union annuities and Aegon Scottish Equitable annuities are good, especially for conventional annuity rates. LV=, MGM Advantage, Just Retirement, and Partnership have good annuity rates for enhanced annuities and impaired life annuities. Prudential and Friends Provident often come out well. Norwich Union, Prudential, and Legal and General are offering postcode annuity rates. Some even offer with profit annuities.

All a bit of a minefield. Read through this annuity website for full information.   

Are you sure which pension annuity you require? Have you used our annuity calculator, or visited another annuity bureau for your annuity purchase. The choice of retirement annuity is vast with all the annuity options. Might you qualify for an impaired life annuity or an enhanced annuity? How well have you done your research?

This website and others contains a mountain of information. Use it to make the right choice. Getting it wrong could cost you dearly. If you might qualify for an impaired life annuity or an enhanced annuity take the time to give as much information as possible. It could really boost your income.