British consumers are displaying
considerable interest in enhanced annuities – also known as
impaired life annuities – and are likely to continue doing so,
believes consultancy Watson Wyatt. This optimistic view from Watson
Wyatt came despite weaker enhanced annuity sales in the third
quarter of 2009, which at £447.7 million ($725 million) were down 7
percent compared with the previous quarter.
“While third-quarter sales fell marginally,
enhanced annuities maintained their share of the overall annuity
market relative to the second quarter,” explained Andy Sanders, a
senior consultant at Watson Wyatt. “Sales in the first nine months
of 2009 were just over £1.3 billion – less than £150 million short
of full-year figures for 2008 – which, based on current trends,
means 2009 is on track to be yet another record year for the
enhanced annuity market.”
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Enhanced annuities provide a higher pension
for individuals with a lower life expectancy and include those
enhanced for serious medical conditions; annuities for smokers and
annuities enhanced as a result of lifestyle factors such as weight
or occupation. Introduced in the UK in 1995, enhanced annuities
make up around a third of all annuities sold (by premium volume) in
the open market in the UK.
