Might you qualify for an enhanced annuity?

An interesting statistic: only 13% of people over age 50 who have consulted a professional for financial advice purposes discussed pension annuities, equating to just over half a million people. However, research from LV=, a leading player in the pension annuity market, shows that access to specialist financial advice can have huge benefits when it comes to purchasing a pension annuity.

In 2006 413,013 consumers purchased a conventional annuity. Some 40% of consumers buying a pension annuity could qualify for some form of enhancement, meaning over 165,000 people could have benefited from an enhanced annuity. The number of people who bought an enhanced annuity in 2006 was 22,686. Therefore, over 142,500 people could be missing out on additional retirement income because they have not purchased an enhanced annuity even though they may have qualified for one.

It is estimated that over £53m of pension annuity income each year is being missed out on by consumers who have not purchased an enhanced annuity (figures based on the amount of people who purchased pension annuities in 2006, sources: ABI, Watson Wyatt, FSA, LV= calculations). This is clearly a huge amount of extra income which would go a long way to assisting people’s retirement wealth.

People’s awareness of their right to purchase their pension annuity via the open market option is increasing, and tools such as the FSA’s Money Made Clear initiative is clearly contributing to this. However, it seems as though consumers are still not sure how to use their open market option, and they would like to shop around, but are not sure how to go about it.

For people facing retirement, help and advice on how to maximise their wealth and income in retirement is key, especially in the current climate. The industry needs to work with this audience and direct them to professional independent financial advice sources to help them achieve what is readily available.

This entry was posted on Saturday, August 23rd, 2008 at 11:07 am and is filed under Ill health, enhanced annuity. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.