Retirement income specialist MGM Advantage has called on the industry to emulate its own course and ensure that every annuity takes into account personal circumstances and is individually underwritten, to give anyone who opts for an annuity the best possible deal.
Since 23 June, the firm has started a new process which means it now offers quotes on an individually underwritten basis, considering each individual’s specific demographic profile (including occupation and location) as well as lifestyle and health factors.
This means the firm can now offer individually tailored rates to anyone seeking the guaranteed income of an annuity in retirement.
The new underwriting approach has seen rates rise (on average) by between 0.1% and 2.9%.
MGM Advantage Pensions Technical Director Andrew Tully explained that people sought a high level of guaranteed income in retirement, and that annuities had a role to play in achieving this.
Tully added that the pension reforms announced by Chancellor George Osborne in this year’s Budget would lead to changes in the annuity market, and that firms utilising demographic and medical information would be able to offer individuals the best retirement income.
There have been varying predictions about the impact of the Budget reforms on the annuity market, after the Chancellor announced annuities would no longer have to be bought upon retirement.
Not surprisingly, some feel this will dramatically decrease the size of the UK annuity market, with PwC suggesting in April that a decline in the market of 75% was possible.
However, annuities may prove more popular than some have predicted, as they are the only product that offers guaranteed income for life in retirement, offering a degree of stability, predictability and security that other financial products cannot equal.