As many inside the annuity industry will know, thousands of retirees are missing out on a potentially higher retirement income through not being offered an enhanced annuity. According to Towers Watson, of the 112,000 annuities transacted in Q2 of this year, just 12 percent had enhancements. With these types of annuities paying up to 30% more per year than conventional annuities, it is vital for anyone who is eligible to make sure they declare any illnesses or lifestyle choices when making an application.
This figure of 12% is well below what many industry experts believe to be the actual number of retirees who could qualify for enhanced annuities. According to pension specialist Just Retirement, around 60% of those who retiree at age 60 could qualify for enhancements. This data is based partially on a 2008 study by the ONS which showed that over two-thirds of those aged over 75 had a long standing illness. The report also shows that 39 per cent of those aged between 45 and 64 had a long-term illness.
Many of the conditions reported in this survey would qualify a retiree for an enhanced annuity. In fact, although only the most serious of illnesses would entitle you to the highest increase, there are many less serious conditions that can still bump up your rate. Just Retirement say that…“…the sophistication of underwriting by enhanced annuity providers has improved dramatically over the past 6 or 7 years to take into account more combinations and lower levels of conditions. Many of these people might now qualify if only they knew about it.”
It must be noted however that not all of the UK annuity providers offer enhanced annuities, which is probably why some people miss out on them. The companies that do offer them include Aviva, Canada Life, Just Retirement, Legal & General, LV=, MGM Advantage, Partnership, Prudential and Reliance Mutual.