Annuity sales broke all previous records and increased by 100 per cent from the same period in 2022, according to Canada Life’s UK half-year financial figures.
Over £100m in new business was transacted in one month in May 2023, setting a record for individual annuity sales since the 2015 pension reforms.
The company notes that this achievement is attributable to the sharp increase in annuity rates over the previous year, which, along with macroeconomic uncertainty, has increased consumer demand for guaranteed income products.
Individual annuity new business sales increased to £441m in H1 2023 from £220m in H1 2022.
Canada Life UK CEO Lindsey Rix-Broom says: “We’ve experienced an extraordinary come-back for individual annuities, driven by the significant increase in value offered from the returns available, combined with customers seeking income security in times of economic uncertainty. The record-breaking performance of annuities has been a major driver of new business sales and the outlook for the second half of the year looks similarly very positive.
“We remain focussed on supporting our customers and communities during challenging economic times. The diversity of our business across wealth, retirement, group protection and asset management means we are well placed to meet the evolving needs of our customers and their advisers.”
Canada Life UK managing director, retirement Tom Evans says: “The annuity market has been revitalised by the much better incomes now available, but there has been a quiet revolution going on since the pension freedoms were introduced.
“From the introduction of longer guarantee periods, 100 per cent value protection, and more flexible retirement products, customers have an attractive alternative to drawdown to deliver the best value from their pensions. Seeking advice, shopping around, and not viewing the decision between annuity and drawdown as a binary choice can deliver a better retirement outcome.
“The unprecedented demand for annuities over the first half of the year has resulted in our teams often being stretched to deliver the service experience advisers and customers expect. I’d like to thank our teams for their hard work as we scale up our resources in this area.”
Today, a benchmark annuity for someone aged 65, with no pre-existing health or lifestyle conditions, would pay in the region of 7 per cent. This annuity rate can increase significantly when disclosing common health or lifestyle conditions, such as diabetes, high blood pressure or being a smoker. Age can also have a big influence on the annuity rate offered.
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