View more on these topics

Impaired sales rise by a third

Sales of impaired life and enhanced annuities grew by 30 per cent in the first half of this year and are set for further growth, putting greater pressure on conventional annuity rates, says consulting actuaries Watson Wyatt.

The firm says enhanced annuity business reached £254m in the first half, representing a 9.3 per cent share of the annuity market of £2.7bn for the half year compared with to 7.3 per cent in the first half of 2001.

Watson Wyatt believes new FSA rules requiring more prominence to the availability of the open market option, which came into force at the beginning of this month, will increase the uptake of enhanced annuities, putting pressure on providers to cut conventional rates by between 5 and 10 per cent.

It estimates enhanced annuities represent around 21 per cent of annuities bought through exercising the Omo, compared with industry estimates that up to 40 per cent of annuitants may be entitled to an enhanced annuity.

Senior consultant Mark Jones says: “The good news is that more people are becoming aware that they are eligible for increased income from their annuity.

“The bad news is that this increases the pressure on providers to reduce rates by up to 10 per cent for healthier annuity applicants.”

“This fragmentation means the healthy should consider income drawdown or investment linked annuities at retirement as an alternative to guaranteed annuities which will look increasingly expensive.”

Annuity Bureau director Ronnie Lymburn says: “Watson Wyatt are absolutely right. With increased take-up of Omo, the bigger players in the market are going to have to face up to the worry of healthy people living longer.”

Recommended

SVM in retail fund drive

SVM Asset Management, the rebranded name for Scottish Value Management, has established an onshore Oeic consisting of three funds. The company has traditionally focused on institutional funds and offshore products such as hedge funds. It now intends to establish a retail presence through the Oeic, which includes the UK 100 select fund. This fund aims […]

A&L rejects centenarian&#39s cash

An IFA has hit out at the inflexibility of the FSA&#39s money laundering rules after a 101-year-old client&#39s £170,000 investment in a two-year fixed-rate bond with the Alliance & Leicester was refused.Croydon IFA Dennis Munday says centenarian Phyllis Grogan had her application turned down because of insufficient identification.Mrs Grogan&#39s nephew, a senior partner of Streeter […]

Virtual virtuoso

If Junior Sobowale&#39s enthusiasm is anything to go by he is about to bounce his competition – the big IFA networks – out of the ring. Last week, he launched a new internet-based IFA network Virtual Net alongside management team Stuart Smith, Ian Nairn and Yinka Akanji.Energy is definitely not something this chief executive lacks. […]

Bowled over by the B&B squad

Messrs Bradford and Bingley are being reincarnated this week with the unveiling of a new TV advertising campaign for the group&#39s IFA division, The MarketPlace.But B&B says the characters (pictured right) have been updated as the Advice Squad – a male Bradford and a female Bingley, sporting dark glasses and black suits with the customary […]

India GDP surprise

By Kunal Desai, head of Indian Equities, Neptune Kunal Desai, manager of the Neptune India Fund, comments on the strength of India’s latest GDP figures. Click here for more Important Information Investment risks The Neptune India Fund may have a high volatility rating and past performance is not a guide to future performance. The value […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment