20 March 2008www.the-actuary.org.ukNewsIndustrySales of enhanced annuities in the UK exceeded 1631bn per annum for the first time last year, according to research by consultants Watson Wyatt. Sales were up by 3% from 2006 and have increased by 161% since 2001.Watson Wyatt says that the dramatic growth in the number of people taking out enhanced annuities 8211 which provide bigger pensions for those with serious medical conditions or with negative lifestyle factors such as weight, smoking, occupation or geographical location 8211 is set to continue. The firm believes up to 40% of people taking out an annuity may be entitled to enhanced rates. 8220There are currently eight enhanced annuity providers in the UK (Retirement, Legal & General, LV=, Norwich Union, Partnership Assurance, Prudential, Reliance Mutual and Scottish Widows) with at least three more new entrants expected in 2008,8221 said Mark Joannes, a senior consultant at Watson Wyatt. 8220The impact on standard annuities may force more standard annuity providers to enter the enhanced annuity market as a defensive measure.8221Service provider switch for Sun Life of CanadaDiligenta, a subsidiary of Tata Consultancy Services, has won a contract to deliver business process outsourcing (BPO) services to support Sun Life Financial of Canada UK8217s (SLF UK) operations. The services, expected to commence in May 2008, are estimated to be worth 163100m over the life of the contract. Diligenta already provides similar services to Pearl Group.Janet Fuller, chief executive of SLF UK explained: 8220We have successfully outsourced our customer services operations for more than five years. 8220In preparation for the natural end of our existing outsourcing agreement, we undertook a detailed and thorough review of the BPO market in the UK and selected Diligenta for its cost guarantees, risk transfer capability and its commitment to match or exceed our service requirements. 8220We have confidence that Diligenta will work closely with us and our current provider to transition the services during the second quarter of 2008 8212 a process that we expect to be transparent to our customers. We are pleased that Diligenta will continue to run the services from Basingstoke as we are very happy with the quality of people and services provided from the current site.8221PADA consults industry on personal account chargingThe Personal Accounts Delivery Authority (www.padeliveryauthority.org.uk) is consulting the industry on charging structures for the national scheme scheduled for 2012 implementation. The consultation document was issued on 29 January and remains open until 22 April. The principal consultation questions are:In relation to charging and the Authority8217s principles:1 How should the principles of the Personal Accounts Delivery Authority relate to the charging structure recommendation, and in what way should the principles best be applied in this context?In relation to charging in the financial services industry:2 What are the charging structures currently used by the financial services industry, both for pensions and other financial products?3 What is the rationale for these charging structures, and which are relevant to personal accounts?In relation to the charging structure options:4 Are there any other charging structure options that might be suitable for personal accounts that are not included in this document?5 Should additional charges be made for particular scheme activities?6 What activities could members reasonably expect to pay more for; what activities could administrators reasonably expect to charge for, and why?In relation to the Authority8217s evaluation criteria:7 Are these evaluation criteria appropriate?8 Which evaluation criteria do you think are most important for personal accounts, and why?9 Are we missing any criteria that might be relevant?In relation to member outcomes:10 How should we assess the impact of different charging structures on member outcomes, and why?In relation to participation in the personal accounts scheme: 11 What is your experience of the effects of different charging structures on the perceptions of consumers?12 What evidence is there about how consumers8217 perceptions affect participation in pension schemes or other financial products?In relation to minimising scheme costs:13 What evidence is there about the way in which administrative complexity or member behaviour have affected costs in existing financial products?Some may feel that the subject of charging structures has been the subject of more than enough consultation and analysis, going back to the debates on implementation of stakeholder pensions in the dying days of the last century. This weariness was perhaps reflected in initial public reaction to the consultation document which tended to favour a straightforward fund-based charging structure, perhaps with a declining charge rate as the amount of the personal account increases.Enhanced annuities break through 1631bn in UKAyhan YildizJanet Fuller: SLF UK CEO020+021_Actuary_Industry_0308.in20 2019/2/08 14:07:07
Page 1Page 2Page 3Page 4Page 5Page 6Page 7Page 8Page 9Page 10Page 11Page 12Page 13Page 14Page 15Page 16Page 17Page 18Page 19Page 20Page 21Page 22Page 23Page 24Page 25Page 26Page 27Page 28Page 29Page 30Page 31Page 32Page 33Page 34Page 35Page 36Page 37Page 38Page 39Page 40Page 41Page 42Page 43Page 44Page 45Page 46Page 47Page 48Page 49Page 50Page 51Page 52Page 53Page 54Page 55Page 56Page 57Page 58Page 59Page 60Page 61Page 62Page 63Page 64Page 65Page 66Page 67Page 68Page 69Page 70Page 71Page 72Page 73Page 74Page 75Page 76 Produced by PageSuite