More people ought to use the open market option for the best UK annuity rates. If you’re approaching the stage where you’re about to hand over your hard earned pension fund in exchange for an annuity in order to receive a guaranteed income for life, you’re probably already heard from your existing pension provider detailing what your pension fund will mean in terms of an income from them if you take their annuity. Fairly recently the Financial Services Authority (FSA) made it compulsory for your existing pension provider to tell you about the open market option. This is essentially your right to shop around and see if you can find more favourable annuity rates than those being offered by your existing pension provider. Not everyone knows they can actually do this, but the question is, why bother?
For many people of retirement age, an annuity makes up the majority of their monthly retirement income. The amount you receive each month will therefore have an impact on your standard of living. Annuity rates can vary massively from provider to provider and you want to make sure you’re getting the best deal you can. It is particularly important to shop around using your open market option if you think you might be eligible for enhanced annuity rates; if you suffer from ill health or if you’re a smoker.
Your existing pension provider is only providing you with a quote for their own annuity contracts. They are one of countless annuity providers available, so there’s a good chance that they aren’t offering the best UK annuity rates. Who wants to spend all those years working and then retire into many years of worrying about your regular income? At least shopping around will ensure you get the best deal you can from your pension fund.
