PensionsJul 28 2015

Sales data show ‘investment guarantee’ demand: LV

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Sales data show ‘investment guarantee’ demand: LV

Increased demand for drawdown products over the last six months has eased the pain of losses in enhanced annuities and equity release for provider LV.

The firm’s trading statement for the period from the start of the year to 30 June revealed a 45 per cent increase in pension sales, driven by a 15 per cent rise in demand for income drawdown.

While annuities overall fell 37 per cent from £232m during the first six months of 2014 to £146m during the same period this year, traditional fixed-term annuities climbed 18 per cent from £77m to £91m.

However, enhanced annuities fell from £137m during the first half last year to £55m.

This indicates more pension savers are looking for an income solution that offers them flexibility but still want an “investment guarantee”, according to Richard Rowney, managing director of LV.

“We believe demand for fixed-term annuities will continue to grow, especially amongst those who reach retirement in good health as these will typically offer them a better return than a standard annuity.”

The firm developed a retirement scenario modelling tool to assist advisers, along with the Retirement Account, which enables blending drawdown and annuity products to be sold as one proposition.

“We have invested in our retirement business to further enhance our proposition and provide additional support, training and tools to advisers, in order to help them prepare and make the most of the pension changes,” he commented, adding that they’ve seen more pension savers blending solutions to achieve the level of income and flexibility they require.

Equity release also took a hit, falling 42 per cent hit to £33m over the last six months, despite figures released today (28 July) by the Equity Release Council which revealed equity release hit £384.3m in the second quarter, the largest amount for any quarter since records began. This was largely driven by lending via drawdown lifetime mortgages.

Protection performed well, with sales up by 50 per cent to £144m from £96m year-on-year across income protection, term, critical illness and whole of life products.

Mr Rowney explained that the firm is now running additional income protection seminars, designed to help advisers that do not currently sell protection to discuss these products with clients.

He said: “In order to make it even easier for advisers to do business with us, we recently upgraded our adviser website. The new technology makes it easier for advisers to navigate it on their smartphones and they and their clients can now use the new site to book tele-interviews for themselves.

“This will further speed up the protection underwriting process meaning that clients can get access to valuable financial protection quicker.”

peter.walker@ft.com