The sale of enhanced annuities has again increased and now make up a third of all annuities sold. These enhanced annuities are bought by retirees that take the trouble to shop around and use the right to the ‘open market option‘.
According to Towers Watson, consumer interest in taking out enhanced annuities – which provide bigger pensions for those with serious medical conditions or with negative lifestyle factors such as weight, smoking and occupation – is set to continue. Enhanced annuities, also known as impaired life annuities, make up over a third of all annuities sold (by premium volume) in the open market in the UK.
These enhanced annuities can quite often get up to 40% plus for those that do take the time to see an independent financial adviser and complete a medical information questionaire. There is a real apathy overall in the retirement options sector with most retirees just accepting the quote from their pension provider. Industry figures say two thirds do not bother to shop around and are therefore missing out on these enhanced annuity rates.
Adam Benson, Independent Financial Adviser at annuity specialist Retirement Solutions said, “I have seen significant increases to retirement income of the clients that have come to me exercising their open market option, as IFAs we know the right questions to ask and can often get 30 to 40% increases in the rates they were offered by the pension provider they saved with. In my opinion not enough people are using the open market option and are therefore missing out on enhanced annuities.”