Boston, MA -- (SBWIRE) -- 05/19/2014 -- New business premiums in the annuities market rose by 25.9% to GBP13.6 billion in 2012 as customers rushed to buy annuities before the gender-neutral pricing rules were introduced on December 21, 2012. Advisers also aimed to secure new annuities business ahead the Retail Distribution Review (RDR) rules banning providers from paying commission to advisers.
The 2012 surge in annuity sales helped insurers to maintain a steady level of new business, leading to an overall expansion of the annuities market, excluding bulk transfer and deferred annuities, at a compound annual growth rate (CAGR) of 4.1% during the review period (2008-2012).
Annuity rates have been in decline for 20 years, reducing the amount of income people can buy with their pension pots to record lows. Annuities convert an individual's pension savings into an income for the rest of their life. The fall in annuity rates was attributed to the rising life expectancy, meaning that life insurers have had to guard against paying out for longer.
Annuities are also invested in low-risk gilts, or government bonds, and therefore, linked to movements in gilt yields. The Bank of England's policy of quantitative easing (QE) caused interest rates and gilt yields to fall, leading to a collapse in annuity rates.
The continuous pressure of Solvency II also meant that annuity providers had to drive up their capital reserves and charge more for annuities - resulting in lower pension incomes for customers.

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Report Highlights

- Annuity sales rise ahead of the gender directive and RDR implementation.
- Annuity rates recover in 2013 but reprieve may be short-lived.
- The 2014 budget wipes out billions from the value of annuity providers.
- New pension rules threaten the future of annuity products.
- The FCA warns against non-advised sales of annuities.

Report Scope

- This report provides a comprehensive analysis of the UK annuities market.
- It provides historical values for the UK annuities market for the report's 2008-2012 review period and forecast figures for the 2013-2017 forecast period.
- It offers estimates of new business premiums for the annuities market.
- It analyses the key types of annuity products.
- It provides an overview of market dynamics and market drivers.
- It discusses various distribution channels for annuity products in the UK.
- It profiles top annuity providers in the UK and outlines the key regulatory changes affecting them.

Reasons to Get this Report

- Gain an understanding of the UK annuities market size.
- Explore the market dynamics across different annuity categories.
- Learn about the performance of market drivers and distribution channels.
- Understand the competitive landscape and key annuity propositions.
- Find out more about key deals and recent developments in the market.

Companies Mentioned in this Report: Aviva Plc, Canada Life Ltd, Just Retirement Ltd, Legal and General Group, Lloyds Banking Group, Partnership Assurance Group Plc, Pension Insurance Corporation Ltd, Prudential Plc, Rothesay Life Ltd, Standard Life Plc

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