Could Shopping Around Boost Retirees’ Annuity Rate?
Looking after your corporate wellness doesn’t just mean working on your wellbeing in the workplace now, but thinking about what happens after you leave. Many people have a retirement plan in place, but if you don’t look for the best deal, you could be missing out. The Financial Services Authority (FSA) is on a mission to find out why one in three retirees doesn’t shop around at retirement.
Many people aren’t aware that shopping around and declaring health and lifestyle conditions can boost the annuity rate you’re offered by up to 40% and you do have the option to buy your annuity from a company other than your pension provider. This lack of knowledge could be having a huge impact on retirees’ financial wellbeing, as in the last 10 years they have collectively missed out on a whopping seven billion pounds, just because they accepted the retirement income offered by their pension provider. Don’t let the same happen to you.
Buying your annuity is one of the most important financial transactions you will make, and you can’t change your mind once you have bought it. Therefore, shopping around is an easy way to make sure you make the right choice, and receive significantly more income than your pension provider might give you. When you approach retirement, your pension company will let you know what your pension is worth, and how much income they would provide if you bought an annuity with them, but the annuity market is competitive and you will probably be able to improve on your pension provider’s quote.
Also, if your wellness is affected by smoking or ill health, you may be entitled to an ‘enhancement’ to your annuity income, so looking beyond your pension provider is even more important. Start by comparing annuity rates online; you can even compare different types of annuity including those with a pension for your spouse, or with inflation proofing. Make sure the comparisons are like-for-like, and that you don’t shy away from mentioning your health. In some cases, certain medical conditions pay out a 40% higher rate, and there are over 1,500 conditions that qualify.
Also, run a beady eye over your pension policy before you take any action. The small print might say that the fund value and/or annuity rate is guaranteed at retirement or on specific anniversaries, especially if you have an older, with-profits plan. Finally, after you’ve chosen the right annuity provider for you, make sure you print out and complete the forms and send them off within 14 days, as policy quotes can change outside of that period.
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