Canada Life’s UK half year financial results report record-breaking annuity sales, up 100% on the same period in 2022.
May 2023 was a record month for individual annuity sales, with over £100m in new business in one month, the highest sales figure since the pension freedoms of 2015, the assurers said.
The company explains this performance is down to the significant rise in annuity rates over the past year, set against a backdrop of macroeconomic uncertainty, which it believes has been driving demand from customers for guaranteed income products.
New business sales for individual annuities were £441m in H1 2023, compared to £220m in the same period in 2022.
Commenting, Lindsey Rix-Broom, CEO, Canada Life UK 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.
Tom Evans, managing director, Retirement, Canada Life UK added that while the annuity market had been “revitalised by the much better incomes now available… 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 assurer said that today a benchmark annuity for someone aged 65, with no pre-existing health or lifestyle conditions, would pay in the region of 7%1. 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.
1. Canada Life benchmark annuity rates over time, £100,000 purchase price, 10-year guarantee, no health or lifestyle factors. 15-year gilt yields sourced from ft.com.
