PensionsJul 2 2013

All annuities to be underwritten in 5 years – Partnership

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Retirement income will be individually underwritten for the vast majority of individuals within five years, according to one annuity provider.

Partnership, which specialises in enhanced retirement income, said the shift towards annuities tailored to the individual is accelerating.

“It won’t be long before annuity providers start to ask more questions,” said Mark Stopard, head of product development at the firm. “I think that will happen within five years.”

The first quarter of 2013 saw record sales of individually underwritten annuities, he said, showing the trend in direction. Postcode annuities already cover most of the country, he added.

“We are already pretty close to individually underwritten outcomes. I think that process is just going to continue.”

Annuity providers are likely to begin by asking simple questions designed to pull out information, such as whether an individual ‘looks after’ themselves or whether they have a family history of illness, Mr Stopard said.

According to the Money Management annuities survey, nine providers offer just enhanced annuities while four providers offer enhanced and standard. Friends Life has indicated a planned entrance into enhanced annuities, while Scottish Widows announced its new offering last week.

Some providers have put the added interest down to developments with the ABI retirement code of conduct. The code requires all members to explain to their customers in literature coming up to retirement that they may be eligible for an enhanced annuity, and therefore more income.

Mr Stopard said it is too early to tell whether the initiative has made a significant impact but anything that encourages shopping around is a good thing.