MGM Advantage, the retirement income specialist, says the latest ABI data shows a growing trend for advisers to consider alternatives to conventional, enhanced and drawdown products.
The ABI data shows that the investment backed annuity market grew 16% in 2011 from £617m to £716m. Although still a relatively small part of the overall advised retirement income market, the exponential growth demonstrates advisers are looking at ways to manage the perfect storm currently engulfing their income drawdown clients. Since 2004, the advised market for retirement products has changed shape dramatically.
Source: ABI, based on premiums
Andrew Tully, Pensions Technical Director, MGM Advantage commented: "The net effects of volatile investment returns, lower GAD rates and lower gilt yields has meant advisers are seeking alternatives for income drawdown customers.
"Investment back annuities offer an alternative for drawdown clients which allows up to 120% of current annuity rates, the potential for growth, a minimum income floor and a potentially higher starting income for people with a poor medical history or certain medical conditions."
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