We shall call these people Mr. and Mrs. X, for anonymity purposes, but this is a real example of what could have been a pension annuity rip-off. Mr. X, of Essex, retired from his profession as an engineer. His pension fund had been saved up with Barclays, and it amounted to £35,762 at retirement. He took some tax-free cash, £8940, and was offered an annuity by Barclays on the balance of his pension fund. However, he was able to secure a better rate elsewhere, 25% more, from GE Life (now Tomorrow, owned by LV). His yearly income was £2492, because an enhanced annuity rate was offered as he had been diagnosed with liver cancer.
The point of this story: Barclays did not ask for any details of his medical history, nor do they take it into account when calculating their annuity rates. This is not uncommon! The message is clear: don’t simply rely on your current pension provider for your annuity. Use your ‘open market option’ and shop around. Mr. X did, and he is 25% better off per year.
