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15 November 2010

as more clients are placed in medically enhanced annuities and typical average annual income rises of 20 – 30 per cent for well over a third of clients More than one in three Annuity Direct clients have obtained a higher annuity as a result of lifestyle or medical issues One client gets enhanced quote of over £3,000 a year – compared to under £1,000 from ceding provider The highest increase was over 70 percent Evidence of clients becoming aware of the importance of a full whole of market service. An increase of up to 70 per cent in annuity income has been achieved by retirement specialist Annuity Direct for its clients – primarily by encouraging clients to complete a common medical questionnaire. Latest internal research by the company (November 12 2010) has revealed that well over one third – 36 per cent – of Annuity Direct’s clients have increased their income as the company conducts its forensic exploration of their ceding schemes and medical histories. It is not uncommon to achieve increases in excess of 20% per annum “In the more extreme cases our clients have been able to enjoy an extraordinary 70 per cent increase in their annuity income compared to what they would have received had they taken an offer from the life company they had their pension fund with – but increases of this magnitude are the exception rather than the rule,” said Chief Executive Officer Bob Bullivant. Bullivant cites one case where a client with a small, £19.5k pension fund built up with Reliance Mutual was offered an annuity of £899 a year – an annuity rate of 6.14 per cent. “But when we went to provide Partnership for an enhanced quote, it came back with an extraordinary £3,116 per year, an annuity rate of 21 per cent. “Prudential and Just Retirement quoted £1,448 and £1,357 respectively – nowhere near the Partnership quote, but it gives an idea of the enormous gulf between what ceding scheme providers are typically able to offer and us trawling the whole of the market for enhanced quotes,” he said. “What our research – based on all client case histories between January 1 of this year to the end of last month – shows is that clients are happy to complete a medical questionnaire in order to maximize their retirement income. “Given that the typical pension fund is around the £30,000 mark, a significant enhancement of in these times of overall falling annuity rates gives a welcome boost to both single and joint annuitants,” said Bullivant. “We have seen a substantial rise in the numbers of impaired life annuities being written, which has had a substantial effect on income. “The most common qualifying conditions for an impaired life annuity are heart disease, stroke, angina, cancer, chronic bronchitis and long-standing diabetes. Some insurance companies also recognise hypertension – but the acid test is the degree by which your condition is likely to reduce your life expectancy,” said Bullivant. Crucial to securing a higher annuity is taking advice from a company which accesses the whole of the annuity – “far too many so-called annuity comparison services are restricted by only having a handful of life companies on their panel, which will automatically reduce the options for getting the highest possible return when a client exchanges a pension fund for an income for life,” added Bullivant. I find it somewhat hypocritical of some providers to argue passionately for higher visibility of the open market option only to then offer a restricted panel. “Far too often we find individuals do not exploit this growing area to their fullest advantage. There are also new and innovative products such as short term annuities that have come to the market and once again our duty is to ensure that these are properly considered.”

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