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Annuity enquiries up by 105% year on year

Retirement Line has released first half year figures for 2016, revealing how UK retirees are responding to market changes in the wake of pension freedoms and the shock Brexit result.

According to Retirement Line, the UK’s largest broker specialising in annuities alone* –  annuity enquiries have more than doubled since the first half of 2015.

H1 2016 annuity figures

The new data proves that despite ongoing market volatility and historically low annuity rates, retirees are still turning to the certainty of annuities to provide a guaranteed income in retirement.

Figures for the first half of this year compared to first six months of 2015 show:

  • Annuity enquiries up by 105%
  • Annuity sales up by 80%
  • Enhanced annuity sales increase by 69%  
  • Fixed-term annuity sales see 68% increase as retirees ride out market volatility

What is causing the increase?

The reforms announced in the budget of March 2014 brought annuity sales crashing down almost overnight, as prospective retirees put their decision-making on hold until April 2015 while they considered the new options available to them.

Since April this year, in spite of the predicted death of annuity enquiries, Retirement Line’s annuity enquiries and sales have been bouncing back, returning to – and exceeding – pre-reform levels within a year.

Why? The surge in figures could indicate that many retirees are still attracted to a guaranteed income over their lifetime in preference to the uncertain income from drawdown. Furthermore, following the reforms, more people are recognising the importance of consulting an impartial specialist for guidance on their many retirement income options.

When the freedoms came about, purchasing an annuity for many people was no longer compulsory. It meant pension providers and brokers needed to promote more varied products and work harder to persuade customers to break away from their existing provider for more competitive deals.

The Brexit effect

The shock Brexit result will of course have a rippling effect across the financial industry and we can already see indications of it impacting retirees’ decision making.

The new figures show an increasing number of customers are opting for products that can provide them with a temporary fixed income, whilst allowing time for the market to settle before making a longer-term decision.

Fixed term annuities do just that. These increasingly popular products are enabling the over-55s to access their pension fund for a fixed period of time (one to twenty-five years is possible) without having to commit to a rate for life.

Retirement Line has seen a surge in the sale of fixed-term annuities in the first half of 2016. It has also predicted a further increase in the coming months and years if annuity rates remain historically low – and as retirees observe how the government’s EU negotiations play out.

Furthermore, with the Bank of England cutting the base rate to 0.25% to boost the economy following the Brexit result, sales of fixed term annuities could increase further.

An enhanced income

Retirement Line’s figures also show that an increase in enquiries has led to more people discovering they qualify for better rates due to poor health or lifestyle conditions.

Retirement Line has seen a 69% increase in enhanced annuity sales since the first half of 2015, which means more clients are enjoying a bigger income for life.

Thanks to the specialist’s searching medical questions that the client’s existing provider may not have asked themselves, clients can achieve up to 75% more income by qualifying for enhanced terms.

Common later life health conditions including high blood pressure and high cholesterol, or having a high BMI or a history of smoking, can all qualify a client for more competitive rates on their retirement income.

Refer your clients today

Do you have clients approaching retirement? Due to our favourable position within the industry we have access to the most competitive rates on the market – meaning a bigger income for life for your clients.

Every time a referred case of yours completes, we will pay a generous introducer fee – and you can rest assured your client has received a first-class service.

Call 0800 1444 777 to speak to our specialist referral team today.

*Based on turnover

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