Enhanced annuity sales drop 7%

Enhanced annuity sales fell 7% in the third quarter of 2009, in line with industry expectations.

Figures from Watson Wyatt show total annuity sales between July and September were £415.8m, down 7% from the second quarter.

However, enhanced annuities have maintained the share of the overall annuity market despite falling sales, indicating a general decline in annuity business.

Sales are also expected to show continued growth on an annualised basis, with £1.3bn of enhanced annuities sold in the first nine months of 2009, compared with a total of £1.44bn for the whole of 2008.

Andy Sanders, senior consultant at Watson Wyatt, says: "The continuing success of the enhanced annuity market means more consumers are benefiting from higher pensions incomes because their medical condition or lifestyle has been assessed and a lower than average expectation of life anticipated.

"A successful enhanced annuity market does however, have implications for those lives that do not qualify. For these lives, expectations of life will continue to lengthen and needs to be reflected in lower levels of pensions income."