Sales of enhanced annuities rose by 41% during the first half of 2010, raising pension income for more informed comsumers with an increasing awareness of the various types of pension annuities available.
Enhanced annuities often provide a higher pension income from the pension savings of those whose lifestyle choices or medical history make it likely that they will not live as long as healthier annuities purchasers. Enhanced annuities are structured to provide a higher payout, as it is likely that they will not have to pay for as long, based on the reduced life expectancy of the annuitant.
Enhanced annuities are particularly associated with smokers, and those with high blood pressure or high cholesterol. This type of pensions annuity is usually allocated on the basis of a points system, with no medical examination required. However, with some companies the points system means that enhanced annuities are more usually offered to those with 2 or more of the conditions mentioned above.
Annuities provider Towers Watson noted sales of enhanced annuities totalling £582m in the first quarter of 201o, a new quarterly record which was then smashed by even better record sales of £676m in the second quarter.
Towers Watson also indicated that enhanced annuities, which were introduced in 1995, now account for a third of all annuities sold in the UK.
