[ad_1]
Annuity gross sales soared 46% in 2023 to £5.2bn however solely a minority of individuals took recommendation earlier than shopping for one, in accordance with ABI information out at present.
Simply 29% of annuity consumers took skilled recommendation earlier than selecting an annuity regardless of the power to buy round for a greater deal.
The gross sales figures reveal a outstanding turnaround for annuity gross sales which have been declining for a few years towards a backdrop of falling gilt yields and low inflation.
The ABI stated that sturdy annuity gross sales mirrored rising rates of interest as extra folks seemed to safe a dependable retirement earnings for all times.
Annuity gross sales in 2023 have been up 46% on 2022 and the best degree since 2014 when the Pension Freedoms have been introduced.
ABI figures confirmed a bumper fourth quarter of £1.5bn in gross sales with a robust third quarter of £1.4bn in gross sales.
The variety of annuity contracts bought jumped in 2023, to 72,200, up 34% on 2022. It was the upper quantity recorded since 75,000 have been bought in 2016.
Stage-only annuities, which pay the identical earnings yearly, remained the most well-liked model of the product, at 82% of the full quantity bought.
The proportion of escalating annuities bought elevated by 2 share factors in comparison with 2022, making up the remaining 18% of whole gross sales.
The ABI stated that with six suppliers providing annuities to new clients, 2023 additionally noticed 64% of annuity consumers store round.
Nevertheless, solely 29% of shoppers who purchased an annuity did so with the assistance {of professional} recommendation.
The ABI stated that latest analysis carried out on behalf of the ABI by Thinks Perception and Technique’s Behavioural Group means that there might be a compromise on the subject of recommendation. The analysis means that when skilled steerage is ‘personalised’ to a person’s circumstances, it could possibly considerably affect the people resolution making, resulting in a greater monetary end result.
The insurance coverage and funding supplier commerce physique additionally identified that the Authorities and FCA’s continued work to shut the recommendation hole as a part of their Recommendation Steerage Boundary Overview gives the “alternative” to take a step in direction of closing the recommendation hole.
Rob Yuille, ABI head of long-term financial savings coverage, stated: “Securing a assured earnings for all times stays an essential a part of the combo of choices for folks to think about at and through retirement and it’s nice to see extra folks benefiting from the safety they’ve to supply. Additionally it is encouraging to see extra folks exploring the market to safe a better earnings.
“Nevertheless, we’d wish to see extra folks benefiting from skilled recommendation and new types of focused assist for customers to make sure they’ll take pleasure in the absolute best retirement.”
The majority annuity market additionally continued to thrive with gross sales reaching £22 billion within the remaining quarter of 2023, taking the yearly whole to £49.3 billion.
Monetary Planning At present Evaluation: The large leap in annuity gross sales in 2023 confirms that annuities are again on the desk on the subject of retirement planning. Certainly, many suppliers have been struggling to maintain up with the demand for annuities as consumers look to achieve from quickly rising annuity charges. Many Monetary Planners are actually factoring in annuities which can seemingly stay engaging whereas charges stay excessive. With rates of interest set to stay excessive for a while the annuity growth just isn’t over but. The extra worth in annuities is making the retirement image extra complicated however doubtlessly extra rewarding for purchasers who look like combining annuities with drawdown and different choices, selecting the comparatively security of annuities and their skill to supply lifetime assured earnings. Of concern, nevertheless, is that regardless of the massive sums usually concerned fewer than three in 10 annuity consumers are selecting to take skilled recommendation. This must be addressed if some consumers are to not make poor selections and doubtlessly lose out because of this.
[ad_2]
