L&G sees equity release sales overtake annuities
Legal & General (L&G) has seen the number of equity release sales overtake annuities in the past six months, while the provider reported, “minimal disruption” from the uncertainty caused by the EU Referendum.
L&G sold equity release products worth more than £200m in the first half of 2016, amounting to more than its total sales of the products in the whole of last year when it entered the market.
The figure also totalled more than its individual annuity sales, which generated less than £200m in the half year – a trend L&G expects to accelerate as more baby boomers retire.
L&G sold a total of £3.6bn in bulk annuities in the period following the takeover of Aegon’s back book in May, outperforming the £2.4bn full year sales figure for the products in 2015.
The firm said it had overcome the volatility caused by the June Brexit referendum unscathed, raking up a total of £4bn in sales in the half year.
The UK voted to leave the European Union in a referendum on 23 June, creating further uncertainty and volatility in financial markets.
Legal & General Retirement managing director Kerrigan Procter said: “Political and market uncertainty around the EU Referendum did not get in the way of business, as companies or individuals will always need to manage their employees’ or own retirement.
“Legal & General Retirement now provides more lifetime mortgages to its customers than individual annuities. We expect this trend to accelerate as more baby boomers retire and choose to access their housing wealth to help fund their retirement, instead of buying an individual annuity.”
Legal & General home finance CEO Bernie Hickman added: “Individual annuities still have their place, but customers want more choice in how they fund their retirement, with accessing housing wealth being an attractive option for asset rich, income poor retirees.”
Hargreaves Lansdown Chartered financial planner Danny Cox said investors and pension providers were reacting to the low level of interest and annuity rates and the new choices available under Pension Freedom.
He said: “The growth in lifetime mortgages will only accelerate, as more baby boomers find that they are facing an ongoing squeeze from low savings rates and fewer able to rely on defined benefit pensions. Some will point out that the boomers are having their cake and eating it.
“A lifetime mortgage means that individuals will have enjoyed the benefit of rising house prices and then spent it, rather than passing it back down to the generation below.”This entry was posted in msol, News. Bookmark the permalink. ← Mortgages for a Woolaway Bungalows The 55+ Mortgage: a flexible way to borrow into retirement →