Pension provider LV has seen a significant increase in adviser demand for fixed-term annuities on the back of the ongoing coronavirus crisis, with the number of applications almost four times higher in May than at the beginning of the year.

The provider had received a total of 68 applications for fixed-term annuities in January 2020, but this grew to 197 last month, as stock market volatility caused by Covid-19 continued to worry retirees.

In January, February and March 2020, LV received a monthly average of 65 cases, but from March onwards the number of applications remained in the hundreds, it said.

The provider reported £1.6m in annual premium equivalent in May, compared with £900,000 in April.

Clive Bolton, managing director of savings and retirement at LV, said this was due to advisers continuing to seek a secure income for their clients who are concerned about the uncertainty Covid-19 has created.

Mr Bolton said: “The uncertainty caused by Covid and the volatility we continue to see in the markets has created an environment where customers are looking for a secure income or a secure known outcome – i.e. they have a guaranteed fund value at the end of their term.

“The other factor is that cash deposit returns are at an all-time low and policyholders want a better return while retaining certainty of outcome.

“It’s worth remembering that once platform fees are deducted, money on deposit gives a negative return in a pension wrapper, but fixed-term annuities give a positive guaranteed return.”

A fixed-term annuity provides a regular retirement income for a number of years – often five or 10 – as well as a ‘maturity amount’ at the end of the specified period.

Savers can then use the maturity amount to invest in another retirement income product, such as another fixed-term annuity or a lifetime annuity, or they can take money out of their pension.

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