Pensions  

Annuities sales in ’slight recovery in Q3’

Sales of annuities increased by 14 per cent over the quarter from June to September 2014, and are up 10.5 per cent in September, compared with August’s data, according to Iress’s quarterly At Retirement Report.

However, despite this rise, the overall sales of annuities are still down 47.1 per cent year-on-year.

The 15-page quarterly report said demand for equity release had increased, with advised sales up 7 per cent in the past six months, compared with the previous six.

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According to Iress, a supplier of wealth management, financial markets and mortgage systems, the average lump sum secured by those releasing equity from their property was £32,476, equivilant to 6.9 per cent of the average house price of applicants.

Similarly, average retirement incomes rose – an average single life annuity secured an income of £3,810 per year in September – up by 4.6 per cent compared to August, and up 16.7 per cent compared to September 2013.

Dave Miller, executive general manager, sourcing, at Iress, said: “The Budget changes knocked the wind from the sails of annuity demand, but the slight recovery in the last quarter suggests the market may have bottomed out in the short-term.”

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In its June report, Iress found that demand for single-life annuity products fell 58.3 per cent immediately following the changes announced in the Budget that will remove the compulsion to purchase an annuity at age 75 from next April.

It found that the average income of annuitants rose 4.6 per cent despite rates falling to a year low.

Source: Iress

Mark Stopard, head of product development at Partnership, said: “In addition to suggesting that demand for annuities is starting to stabilise across the market, this report highlights how people are increasingly looking to enhanced annuities.

“Indeed, the number of those who annuitised through an adviser and declared a health condition has risen from 28 per cent in June 2014 to 31 per cent in September 2014.”

Adviser view

Cleona Lira, an IFA with 2Plan Wealth Management in London, said: “People need to be informed about pensions, and in some of these cases people need to spend a lot of time with an adviser. Pension advice should not be made quickly.”