Legal & General sold more lifetime mortgages than individuals in the first half of 2016, the first time home equity sales have beaten annuities.
Lifetime mortgage sales exceeded £200m in H1 2016.
L&G says its retirement division had experienced strong new business sales in H1 2016, with minimal disruption caused by uncertainties over the EU referendum. New bulk annuity transactions totalling around £250m were executed in June.
Following the £2.9bn Aegon back-book transaction in May, this brings bulk annuity business executed in H1 2016 to £3.6bn, over £1bn ahead of the full year bulk annuity sales figure of £2.4bn for 2015.
Legal & General Retirement sales across bulk annuities, individual annuities and lifetime mortgages of £4bn have been achieved in H1 2016.
L&G Retirement managing director Kerrigan Procter says: “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. Bulk annuity transactions continue to be an important way for Legal & General to deploy capital to help our UK clients, and use the premiums to invest in real assets such as UK infrastructure and direct lending.”
Hargreaves Lansdown chartered financial planner Danny Cox says: “Brexit dominates the headlines, but L&G says the referendum did not get in the way of business, with minimal disruption to sales. The pattern of sales is changing though, with investors and pension providers reacting to both the rock-bottom level of interest and annuity rates and the new choices available under Pensions Freedom.
“The fall in annuity rates is leading to more and more asset-rich but income-poor retirees looking to access their housing equity to fund their retirement. 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.”