Demand for annuities has increased by 10.5 per cent in the month from August to September according a new report from Iress. And since their trough in June, sales have recovered by 14 per cent.
After the Budget earlier this year, many have delayed their decision to annuitise in order to wait to understand more about the extent of the options available. As a result, demand for single life annuity products via advisers had fallen by 58.3 per cent in June compared with the start of the year, according to Iress.
While the increase is far below their historic peak – and 47.1 per cent below their level a year ago – the increase is a positive step as 6.8 per cent more annuities were sold in the past quarter than in Q2.
Iress said the average income being secured per pot also climbed to £3,810 per year in September, a 4.6 per cent rise compared to August. Income is now 16.7 per cent higher than a year ago when the average pot stood at £3,265.
Peter Bradshaw, national accounts director from Selectapension, said that it is clear the market hasn’t recovered despite seeing an increase and rebound in annuity sales in recent months. As more advisers are choosing the less traditional route for their clients’ pensions, the use of software will become more important so advisers can focus more on building a relationship with their clients.
Mark Stopard, head of product development at Partnership was more positive regarding annuities. “As people start to personalise their retirement using the new freedoms provided by pension reform, more people will look to the secure income offered by an enhanced annuity to cover the essentials,” he said.