Choosing the right annuity – how simple is it?

The focus on annuities during 2013 was greater than it had been for many years.

The European Gender directive, RDR, ABI Code of Conduct on Retirement Choices – they have all played a role in both increasing the attention and confusion around annuities.

It should be fairly simple – client pays a lump sum to the provider, the provider then guarantees to pay client an income for life. Alas, life is never simple with fluctuating annuity rates, economic uncertainty, ageing population and the expectation of a decent level of retirement income making for an uncertain future for your clients.

Helping your client through this journey is not simple and competition from online annuity comparison sites can complicate this further.

The ABI Code of Conduct on Retirement choices encourages those at retirement to shop around to achieve the best rate. Often forgotten, but it also encourages buying an annuity at the right time and in the right form should also form an integral part of the annuity purchase decision.

Despite a choice of retirement products, annuities are still the most popular retirement solution for people with a pension, especially for those with smaller pots. Enhanced Annuities, whilst gaining popularity, are still not as widespread as they could be, particularly amongst customers that buy an annuity from their pension provider.

Whether that is due to lack of awareness on part of the customer or a reluctance to admit that their life expectancy is shorter as a result of medical condition/lifestyle is up for debate. However, individuals could enhance their retirement income by as much as 40% by researching different annuity options and being open about their medical history. Scottish Widows estimates 45% of its customers could qualify for its enhanced annuity.

Choosing when to buy and the right shape of annuity is one of the biggest decision clients will make and their lifestyle in retirement depends on this decision. Therefore it is important that they have access to advice and/or the right level of information to enable them to make an informed decision.

At Scottish Widows we launched our Enhanced Annuity proposition to the Intermediary market in June 2013 and our product became available on the Webline portal at the beginning of November. We've adopted a forward looking position taking advantage of the improvements to the ORIGO e-CQRF messaging standard introduced in 2012. The core part of our process revolves around a fully electronic enabled quote and application process.

How our proposition helps you and your client

  • Competitive quotes first time
  • Automatic underwriting decisions on all quote requests, so you will know instantly if your client meets our criteria.
  • Consistency of underwriting assessment and outcomes.
  • Quotes will be guaranteed for 30 days from the date the quote is produced. The application form and purchase price must be received within the 30 days for the terms in the quote to apply.

Due to complexities of underwriting, we may not be able to provide an automated underwriting decision in all circumstances. However, we believe that this should represent a small proportion of cases and 80% of customers should be able to receive a guaranteed quote instantly.

For more information about Scottish Widows Enhanced Annuity visit: