When you retire it’s important you get the best annuity rates if you’re buying an annuity, and you’ve got friends in high places to help. Campaigner Baroness Greengross is going to lobby senior Government ministers about various concerns that people with smaller pension funds will be unable to access the appropriate independent financial advice at retirement after the Retail Distribution Review (RDR) kicks in later this year. The principal issue relates to the role financial advisers play in helping people to shop around using their open market option for a better retirement income.
Research into getting the best annuity rates by at-retirement specialists Partnership suggests less than 50% of people who have bought an annuity know what an annuity is and around 75% of those who purchased an enhanced annuity did so because the product was recommended by a financial adviser, i.e. they took advice. Last September, Partnership’s Andrew Megson warned that when RDR comes into play it will cause significant consumer harm as fewer people with small pension funds will be able to access decent advice when they come to retire.
When it comes to annuity rates, Barongess Greengross has stated that as we move into a defined-contribution (money purchase) world, where decumulation at retirement (buying a retirement product) decisions are made by individuals and not pension schemes (such as with final salary pension schemes), more people are going to need proper financial advice. She is concerned that the RDR could actually lead to a reduction in the availability of this financial advice, and she believes we need to ensure that individuals with small pension funds do not lose access to advice completely. A lack of advice will lead to people suffering from lower retirement incomes.
In an online poll carried out by moneymarketing.co.uk into getting the best annuity earlier this month (January), 88% of respondents said that the RDR will actually create an advice gap for individuals with small pension funds. People who take advice at retirement almost invariably end up using the open market option and shop around for a better deal, which on average can lead to a 20% uplift in their annuity income. That shows how important advice at retirement is and how much of a difference it could make to people’s finances in retirement. We’ll help you shop around when you retire, and we’ll help you get the best annuity rates.
