Annuity rates rise towards 6pc again

Annuity rates have risen for the first time in almost a year, according to figures from the Annuity Bureau.

Figures in February showed a 3pc increase in Aviva's level annuity rate, while the other four leading providers of annuities also raised their rates. A 65-year-old with a pension pot of £100,000 would now get an annual income of £5,905 from their annuity.

Link here to read the full article from the Telegraph.

Open market annuity lead-generation tool launches

Advisers can now use a new web-based tool designed to promote to consumers the benefit of advice when searching for open-market annuity products, founder Bernard Down has announced.

The new service, dubbed the Open Market Option Bureau, is a “unique not-for-profit service” which would focus on local, impartial advice for annuity purchasers, and would help advisers promote themselves to consumers within a 25 mile radius of their businesses.

Take a look at the full article from the FT Adviser.

Variable annuity sales jump 30% in 2012

UK variable annuity sales rose to £1.42bn in 2012, an increase of 30 per cent over 2011, research by Towers Watson has revealed.

Quarterly sales exceeded £400m for the first time in the last quarter of 2012. Policy numbers also increased in comparison to 2011 by 19 per cent to 16,200.

To read the full article from FT Adviser, click here

Switching on to social media

Does any of it really work? And does the advent of social media herald the beginning of a new era of genuinely hot leads?

Financial advisers are by nature a conservative bunch. Cautious, not easily impressed by the endless onslaught of marketing literature.

The biggest question advisers invariably have is: “Can it generate business?” and the answer is an unequivocal yes – so do not miss out.

Have a look at this article from FT Adviser

Enhanced annuities account for only 4% of the direct market

• Enhanced annuities account for only 4% of the annuity market where people stay with their existing provider, compared to 46% where people shop around
• However, up to 70% of people could qualify for a better income due to health or lifestyle conditions
• Over an average retirement, people could be losing out by thousands of pounds in income by not considering all the options available.

Where a customer buys an annuity through their existing pension provider, the number of customers who purchase an enhanced annuity is significantly lower, and yet these are the very people who are more likely to qualify for a better rate through the enhanced route.

Full details can be found in this press release.

Retirement income guide from Defaqto

Defaqto has launched a Retirement Income Guide for financial advisers, which looks at the key issues associated with this area of financial planning to help advisers establish structures and processes that enable them to deliver compelling solutions to clients.

The guide includes:

• Guidance on understanding and addressing client retirement income options and key risks likely to be encountered during retirement planning
• Analysis of product types with a rundown of the key players in each category and related adviser considerations
• Statistical data on longevity trends
• Example annuity rates to show advisers how these might be used to frame client advice and guidance discussions.

Definitely worth a visit to their website to download a free copy of the guide.

Autumn Statement 2012 reaction

It’s extraordinarily disappointing that the Government has decided to penalise pension saving again within today’s Autumn Statement. It appears no Government can resist this seemingly easy option. The most significant changes mean the annual allowance will fall to £40,000 a year, and the lifetime allowance to £1.25m, with effect from 6 April 2014. This is down from the current limits of £50,000 and £1.5m which have only been in force since 6 April 2011.

The changes will primarily affect people in defined benefit schemes. These are not necessarily the very richest, but could be moderate earners who have worked in the same profession for a long period of time, such as teachers, doctors and civil service workers.

While this is a short-term win for the Treasury, in the longer term it will have a detrimental impact on savings in the UK. We need a simple, consistent savings system that people can trust. And which encourages them to save without having to worry rules will change, yet again, next year or the year after. Perhaps now is the time to take long-term pension decisions out of the hands of politicians by forming an independent pension commission.

Surprisingly the Government has also u-turned on capped drawdown, pushing the maximum income back to 120% only 18 months after reducing it to 100%. I recognise there is an urgent need to help people who have seen a significant fall in their drawdown income. However we have to tread with caution as funds can be quickly diminished by taking 120% each year.

So a balance needs to be struck between short-term income needs and ensuring income is secured for life. The risks of remaining in drawdown increase substantially as people get older, so many will wish to consider some form of annuity once they’re in their 70s.