15TH APRIL 2010
Partnership, one of the UK's leading providers of financial products for people with health and lifestyle conditions, has created a solution to enable advisers to provide better value for the 80% of people retiring with funds below £30,000.
At present the vast majority of people retiring with pension funds of less than £30,000 are defaulting into standard rate annuities from their pension provider. Partnership is committed to helping address this.
Partnership’s new online enhanced annuity solution aims to deliver better annuity rates to consumers with smaller funds while also ensuring profitability for advisers writing annuity business. This solution is being made available through the New World Distribution Services platform designed by 1st-The Exchange.
Existing online application processes in the enhanced annuity space are lengthy, and can be costly for advisers. This level of cost is not justified for many smaller cases. For a typical adviser the true cost of advising on a £30,000 fund is estimated at £750. Given typical commission rates of 1.5%, this would result in a loss of £300. It is clear that customers and advisers would benefit significantly from a simpler more efficient process.
Partnership has launched its solution to enable advisers to transact an enhanced annuity online using 10-12 simplified yes/no medical questions. These are designed to reflect the needs of the majority of smaller enhanced annuity cases and will enable the adviser to process this business quickly and profitably while still delivering an enhanced rate to their customers. Crucially, the speed and ease of this process is enabled by Partnership’s expertise in medical underwriting.
- According to the ABI, in the third quarter of 2009, 80% of annuities were bought with funds of less than £30,000 and this trend is predicted to continue.
- This figure takes into account the cost of a fact-find meeting, product research, recommendation report, second meeting, paperwork and administration costs.
Tom McPhail, Head of Pensions Research at Hargreaves Lansdown, said:
“The existing Open Market Option process has so far failed to serve the needs of the majority of consumers retiring with small funds. The industry needs to develop more innovative approaches to serving these consumers to ensure the annuity market provides good value solutions for all retirees – not just the most wealthy”.
Andrew Megson, Managing Director of Retirement for Partnership, said:
"Many people are unable to take full advantage of their right to shop around for an annuity because their funds are too small to make it viable for the adviser community to guide them to a solution that could deliver them far better value.
"Partnership has developed a solution to this problem that rests at the heart of Treating Customers Fairly. By providing answers to a short series of basic health and lifestyle questions, using a platform designed for speed and intuitive use, clients stand to benefit from the increased income of an enhanced annuity. This makes it far easier for advisers to grow their business exponentially in this important and neglected area of the market."
ENDS
For more information please visit www.partnership.co.uk/BIG
Penrose Financial, Karolina Adamkiewicz/Kimberley Ferguson
+ 44 (0) 20 7786 4888 Email: Partnership@penrose.co.uk
Jim Boyd, Director of Corporate Affairs, Partnership
+ 44 (0) 20 7618 2730 Email: Jim.Boyd@partnership.co.uk
Notes to Editors
About Partnership
Partnership is a specialist provider of financial solutions for people with health/ lifestyle conditions, as well as those suffering from a serious medical impairment. They are experts in the field of medical underwriting, one of the key thought leaders in the retirement market, and offer a firm commitment to supporting advisers in growing their business.
Partnership offers a complete range of Enhanced Annuity solutions, from clients who smoke or have minor health impairments, through to serious conditions such as cancer. They are the market leaders in the provision of annuities for Long Term Care funding, and also offer specialist Protection solutions for clients who have been declined cover from standard providers.