One annuity option might be the best enhanced annuity rates when it comes to your retirement, basically giving you increased pension annuity rates and a higher retirement income. Most people are getting used to shopping around for motor insurance, or when searching for a new car. Yet when it comes to making a financial decision which is irrevocable and will affect their income in retirement greatly, just over a third of people shop around for the best annuity rates to suit their requirements. This could be down to a lack of education, a lack of information and a lack of customer awareness. Indeed, many people’s pension fund sizes being deemed too low to deal with by financial advisers is a bit of a barrier. Last year, 88% of pension annuities were bought with funds below £50,000 in size.
Those in ill health or smoking are actually losing out even more by simply taking the current default option of their pension plan provider’s annuity, instead of seeking a provider that offers some of the best enhanced annuity rates, which can give a significant increase to income. It is estimated that about 40% of retirees could qualify for an enhanced rate, which can make hundreds or thousands of pounds difference every year. Take a look at some examples on this website to see just how much more is achievable.
It’s probably fair to say that the UK government needs to make urgent changes to the way retirees are dealt with at the point of retirement, and to the way they are helped to make their decision. Hundreds of thousands of people over the next decade would secure a better income in retirement if they stepped back and reviewed their options. Pensions Income Choice Association (Pica) has been launched for this very reason, and is proposing simple changes to help people at the point of retirement, including the introduction of better personalised statements containing sufficient information for retirees to use to obtain multiple annuity quotations, and help people with smaller funds access financial advice by having a register of advisers who are prepared to advise on pension fund sizes of less than £50,000.
We really do need to change the way the retirement market works in order that retirees are treated fairly, have the knowledge they need to make the important choices that are right for them, and achieve the best retirement income they can from their hard earned pension fund savings.
