Second half sales in 2012 were £2.49 billion. Sales in October to December were a quarterly record at £1.32 billion.
Mike Williams, a leader in the Insurance Management Consultancy team at Towers Watson, said:
"2012 sales approaching £4.5 billion is yet another landmark in the enhanced annuity market. Over 85,000 consumers benefited from higher pension incomes because their medical condition or lifestyle has been assessed and a lower than average expectation of life anticipated. “
Consumer interest in taking out enhanced annuities, which provide bigger pensions for those with serious medical conditions or with negative lifestyle factors such as those linked to weight, smoking and occupation, is set to continue given the potential to reach an even wider cross-section of the population.
Mike Williams noted:
“Despite the latest record level of sales by volume, enhanced annuities are still only around 20% of the total annuity policies sold. The current range of medical conditions and lifestyle factors that can lead to enhancements suggests a greater proportion of retiring consumers could benefit.”
He added: “And looking ahead, the impact of the Financial Services Authority thematic review of annuities looks set to provide further support for the use of individualised underwriting based on health and lifestyle related factors to enable retirees to make the most of whatever pensions savings they have.”
