Canada Life UK has reported record-breaking annuity sales, as demand for income products rise.
The insurer said in its half year results published today (21 August) new business sales for individual annuities were £441m in 2023, compared to £220m in the same period in 2022.
It said May 2023 was a record month for individual annuity sales with over £100m in new business in one month.
This is the highest sales figure since the pension freedoms of 2015, according to Canada Life.
Canada Life put down the record-breaking sales to the significant rise in annuity rates over the past year against a backdrop of economic crisis and rising inflation.
It added that this has driven demand from customers for guaranteed income products.
It said benchmark annuity for someone aged 65 with no pre-existing health or lifestyle conditions would pay in the region of 7%.
This annuity rate can increase significantly when disclosing common health or lifestyle conditions such as diabetes, high blood pressure or being a smoker. Age can also have a big influence on the annuity rate offered, the insurer added.
Canada Life UK chief executive Lindsey Rix-Broom said: “We’ve experienced an extraordinary come-back for individual annuities, driven by the significant increase in value offered from the returns available, combined with customers seeking income security in times of economic uncertainty.
“The record-breaking performance of annuities has been a major driver of new business sales and the outlook for the second half of the year looks similarly very positive.
“We remain focussed on supporting our customers and communities during challenging economic times. The diversity of our business across wealth, retirement, group protection and asset management means we are well placed to meet the evolving needs of our customers and their advisers.”
Canada Life UK managing director retirement Tom Evans added: “The annuity market has been revitalised by the much better incomes now available, but there has been a quiet revolution going on since the pension freedoms were introduced.
“From the introduction of longer guarantee periods, 100% value protection, and more flexible retirement products, customers have an attractive alternative to drawdown to deliver the best value from their pensions.
“Seeking advice, shopping around, and not viewing the decision between annuity and drawdown as a binary choice can deliver a better retirement outcome.
“The unprecedented demand for annuities over the first half of the year has resulted in our teams often being stretched to deliver the service experience advisers and customers expect.”
The rise in annuity sales has also brought spotlight to insurers service levels. Last month advisers contacted Money Marketing to rail against insurance companies after they faced difficulties arranging annuities for their clients due to poor service and long delays.
Aviva, Canada Life, L&G are some of the household insurers whose annuity service standards were found wanting.
For annuities Canada Life are hard to fault. Good rates, great service. Good flexibility all round. What’s not to like?
Canada Life also offer great flexibility using their Retirement Account to purchase an annuity. This offers the chance to buy an annuity now while rates are high, but defer the income within the Retirement Account Drawdown Pot until it is needed in the future.
I was thinking that Canada Life’s service was pretty shocking from my own experience, being quoted umpteen working days for quotes and to request funds from ceding schemes. Understand the market has exploded, but i think some companies haven’t catered for this with staffing levels.
How Odd. I usually got an e-mailed quote by return. First class service.