Annuities have boomed in popularity among Britons as people seek income security and interest rate rises have created a "significant increase in value", according to the chief executive of Canada Life UK.
Commenting on record annuity sales for the company over the first half of the year, Lindsey Rix-Broom, chief executive of Canada Life UK, stated that “customers are seeking income security in times of economic uncertainty".
Canada Life UK reported more than £100mn in new annuity business in one month, with May 2023 recording the highest sales figure of annuities for the company since the pension freedoms in 2015.
In its half-year financial results, the provider stated that this increase in sales was driven by the rise in annuity rates over the past year, which has made returns more attractive.
Amid the cost-of-living crisis and economic uncertainty, she said the company had seen more demand from customers for guaranteed income products.
Rix-Broom also commented: "The record breaking performance of annuities has been a major driver of new business sales, and the outlook for the second half of the year looks similarly very positive".
The recent boom in annuity rates has made the returns available much more appealing, which can explain the reported growth seen by Canada Life UK.
The company has reported new business sales for individual annuities were £441mn in H1 2023, compared to £220mn in the same period in 2022.
Tom Evans, managing director at Canada Life UK, described the revitalisation of the annuity market as “a quiet revolution” that has been going on since the pension freedoms were introduced.
He said: "Seeking advice, shopping around, and not viewing the decision between annuity and drawdown as a binary choice can deliver a better retirement outcome."
But he also added that the company was committed to bringing more people on board to help consumers and their advisers.
He said: “The unprecedented demand for annuities over the first half of the year has resulted in our teams often being stretched to deliver the service experience advisers and customers expect.
"I’d like to thank our teams for their hard work as we scale up our resources in this area.”
In this first half, Canada Life UK said it had welcomed 150,000 new customers, bringing its total to 3.6mn customers, and sales of £2.1bn, according to the company results.
