Ailments on the road to retirement
Enhanced annuities have come a long way since first being offered only to smokers in 1995.
He adds: "Every annuity provider wants a slice and many offices would love to keep the money and pay poor annuities. There needs to be a massively streamlined process and compulsory advice, properly paid for. The situation is now heading towards all annuities being underwritten in some form because there won't be enough 'standard lives' to pool the risk, soon."
Others feel that the future of the enhanced annuity hangs in the balance given that the best ordinary annuity is often better than the enhanced annuity, and many question whether the continuing introducing of pricing factors to standard annuities will mean the end of enhanced as we know it.
Calls have also been made for a greater emphasis on the controversial Open Market Option. Introduced in 2002, pension companies have been obliged by law to make the availability of the client's Open Market Option clear to them and from 2006 companies have had to make this a mandatory part of their offerings documentation. However, Tom McPhail, head of pensions research at Hargreaves Lansdown accuses insurance companies of "misinformation, spin, propaganda, foot-dragging and wilful incompetence" when it comes to Open Market Option.
Despite hiccups, many agree that it has become easier to obtain an enhanced annuity - in Mr Foulkes words: "there is no doubt that the enhanced annuity market is much improved , and we would expect this to improve still further, as more players enter the market and those recent entrants build up both their personal and claims experience." And as increased longevity forces more and more IFAs to adapt their business models away from asset accumulation to decumulation, awareness and knowledge of the different annuity offerings is key to securing future business and looking after clients post retirement.
Maike Currie is deputy features editor for Financial Adviser
