Enhanced annuities break pounds 1bn barrier; PERSONAL.
Sales of the products, which pay higher pensions to people whose lifestyle or health reduces their life expectancy, jumped by 35 per cent during the year to reach nearly pounds 1.1 billion, according Watson Wyatt, an actuarial firm.
It bought the total increase in sales of such annuities since 2001 to 161 per cent.
And Watson Wyatt said it expects growth to continue, saying that up to 40 per cent of people taking out an annuity may be entitled to enhanced rates.
Enhanced annuities, also known as impaired life annuities, are open to people with serious medical conditions, or those who smoke, are overweight or even have certain occupations and who live in certain areas of the country.
But Watson's warned that the increased sales of enhanced annuities was having an impact on the rates paid by standard annuity providers, who are left with a pool of people with healthier lives.
About 20 per cent of all annuities bought through the open market are now enhanced ones, and this, combined with increased life expectancy, is putting downward pressure on the rates available for healthy people, as well as the margins of the firms that offer them.
Mark Joannes, a senior consultant at Watson Wyatt, said: "There are currently eight enhanced annuity providers in the UK with at least three more new entrants expected in 2008. The impact on standard annuities may force more standard annuity providers to enter the enhanced annuity market as a defensive measure."
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|Publication:||The Birmingham Post (England)|
|Date:||Feb 2, 2008|
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