ENHANCED ANNUITIES / IMPAIRED ANNUITIES
First introduced to the UK in 1995, enhanced annuities or impaired life annuities have a substantial market share of all annuities sold in this country.
If you are in advanced years, a smoker or have impaired health (or have had impaired health in the past) you may be able to increase your retirement annuity income.
Some pension annuities, called "Enhanced Annuities" or "Impaired Annuities", pay more than standard annuities because those in better health tend to live longer than the average person. The annuity providers therefore have to pay out more over the healthier person's retirement so their yearly income is usually lower. This is why it's crucial to report any health problem to your adviser, no matter how small you think it is. It may get you a higher annuity rate of return.
This is also the case if you smoke ten or more manufactured cigarettes or use 85mg of rolling tobacco a day.
Even though you may regard yourself to be in quite good health, the reality can often be surprisingly different. Some think they have to suffer from a serious medical condition such as heart disease, cancer or stroke to receive extra annuity income, but a seemingly mild condition or complaint may substantially increase your annual retirement income.
In fact, if you have one of nearly 1500 ailments, such as being overweight, high blood pressure, asthma, rheumatoid arthritis, angina, heart problems etc., you must ensure you mention it to your adviser.
Additionally, higher annuity incomes are often achieved by:
• Those who have retired from certain occupations
• Those who live in certain parts of the country
It's estimated that up to 40 percent of the UK population could boost their annuity income with an "enhanced annuity". If you believe that you fit that category, it is extremely important that you tell our team of annuity experts about it. You will stand a better chance of a higher annuity income for the rest of your retirement.
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Pension Annuities for Smokers
If you are a smoker, annuity providers factor in that you are more likely to die sooner than the average person who doesn't smoke. They therefore assume that they'll not be paying your annuity to you for as long. A presumed shorter retirement lifespan therefore means that smokers can increase the amount of annuity income that they receive.
Annuities: Older Smoker
As a smoker, you may already be entitled to receive a higher pension income, but also, dependent on your age, you may receive further enhanced annuity rates of up to 30 percent above the standard level annuity rate. For example, if you normally would receive £1,000 per year as a non smoker, you could receive as much as £300 per year more as an older smoker.
In the case of enhanced annuities it can actually pay to be older and in poor health!
Annuities Up in Smoke
The average British smoker spends £92,000 on cigarettes in a lifetime, according to research by Clerical Medical, enough money to buy an annuity of approximately £6,000.
For each smoker that’s a breathtaking 373,302 cigarettes smoked and 18,665 packets purchased.
On a yearly basis that breaks down to £1,500 spent on tobacco, which works out to 6,060 individual cigarettes (303 packets).
In a day a smoker burns through 15.24 cigarettes, which in a week totals 106.68 – but with the normal smoker admitting to an increase in their usual daily quota when they go out, that weekly figure tops 116.
Annuity provider Clerical Medical's survey of 3,000 people found UK smokers collectively get through 72 billion cigarettes a year (3.6 billion packs), costing a shocking £17 billion. Laid out in a line all those cigarettes would stretch over four million miles, and circumnavigate the earth 154 times.
John Hiew, Managing Director of Clerical Medical, said: ‘’We all know about the health problems associated with smoking but we wanted to find about out the wealth implications associated with the habit.”
He continued, "It’s a staggering amount of money British smokers spend whichever way you look at it, and that’s a hell of a lot of disposable income just going up in smoke. If people were to consider putting the money they spend each month on cigarettes into a savings plan not only would they probably live longer, but they could have an extra income of thousands of pounds a year."
Even social smokers – who only light up when they go out to bars, clubs or restaurants – spend over £11,000 in a lifetime. Part-timers still manage to inhale 14.55 cigarettes a week, in a year that stacks up to 756 fags (37 packs), which equals £186 per year.
Clerical Medical's research also revealed that 83 per cent of respondents have tried giving up smoking at least three times. A third admitted that they lasted only a couple of days, while the same amount crumbled after two months, while 15 per cent managed a year. Startlingly one in ten people said they sparked up again after more than twenty years of resisting the temptation to smoke.
Northern Ireland folk emerged as the biggest smokers, ahead of Londoners and those from the North West.
In order, the following are the regions where you're most likely to be a smoker and therefore more likely to get a higher annuity:
1. Northern Ireland
2. London
3. North West
4. East Anglia
5. South West
6. Yorkshire
7. South East
8. Wales
9. Midlands
10. Scotland
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