You are here: Home - Retirement - Retirement planning - News -

Annuity sales collapse in 2014

Written by:
Sales of retirement annuities collapsed by 44 per cent last year as thousands prepare to capitalise on George Osborne’s new ‘pension freedoms’, according to research released by Towers Watson.

The Association of British Insurers is scheduled to publish full annuity sales figures for last year later this week, but sales for the first three quarters were down 56 per cent. Standard Life announced last week that its annuity sales were down 66 per cent last year.

Tower Watson’s research suggests sales of every type of annuity have suffered since the pension reforms were outlined by Osborne last April. Variable annuities, which offer an income linked to the stock market were the least affected annuity product in percentage terms, with sales last year falling 22 per cent from the year before. However, variable annuities comprise a small portion of the annuity market overall.

Enhanced annuities (products that pay higher annual incomes to those with shorter life expectancies) suffered notably; sales of enhanced annuities were 65 per cent lower in Q4 last year compared to the same period the year prior. It appears that those in ill-health are planning to withdraw their pension fund as a lump sum when the time comes.

Jeremy Nurse, one of Tower Watson’s directors, believed this fall to be “inevitable”, given that many retirees are now “anticipating greater freedom about how they use their pension.”

Nurse also pointed to “declining gilt yields over the second half of last year” putting continual downward pressure on annuity rates as another key disincentive.

“If I was in ill health, I wouldn’t want an annuity,” acknowledged Laith Khalaf, senior analyst Hargreaves Lansdown. “The ideal situation for someone buying an annuity is a long life expectancy. Lots of people who do not have this will be thinking I’d rather have the money to enjoy now.”



There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Everything you wanted to know about ISAs…but were afraid to ask

The new tax year is less than a fortnight away and for ISA savers or investors, it’s hugely important. If yo...

Your right to a refund if travel is affected by train strikes

There have been a wave of train strikes in the past six months, and for anyone travelling today Friday 3 Febru...

Could you save money with a social broadband tariff?

Two-thirds of low-income households are unaware they could be saving on broadband, according to Uswitch.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week