Asset Backed Annuities

Asset backed annuities are being launched by most of the major annuity providers because of the solvency requirements for guaranteed annuities. Asset backed annuities currently account for around 5% of all annuity sales.

asset backed annuitiesWhy would you have an asset backed annuity

With an asset backed annuity there is potential for income increases if the assets backing the income increase in value. On the other hand if the assets fall in value then obviously this can mean that if you do not decrease your income that the remaining funds will keep decreasing and may not sustain the income requirements indefinitely.

Another term for asset backed annuities is invested annuities or investment linked annuities, there is lots of different terminology for annuities.

We at think that at some point a major provider will launch an asset backed annuity with a guaranteed income option, of course for safety the income may be lower than the starting income for a guaranteed annuity.

As with all financial products you should always seek independent financial advice from an IFA that is a specialist in annuities. There are many IFA firms in the UK but not all specialise in annuities, we therefore recommend that you try and find one that does specialise in annuities and they can then advise you on asset backed annuities.