A number of charities which represent the concerns of the elderly have voiced their own concern over the payouts being offered from small or modest pension pots. Help the Aged and Age Concern are said to be worried over “poor deal from annuities“. With the lack of growth in the stock market having an adverse impact on pension funds, it is easy to see why they would be concerned over future retirement incomes. Moreover, falling interests rates have meant that rates for annuities have also taken a heavy blow over the past few years.
This double whammy of misfortune for annuitants has left some retirees with a much lower retirement income than they would have expected to receive just a few years ago. For people with a small pension pot this is a very real concern as there are very few alternatives open to them. They can either retire later in life or take part-time work to help bolster their income, neither of which are particularly appealing in the vast majority of cases. Some may be forced to take equity release.
The charities have said that if the government were to offer more support and advice then the situation for retirees could be improved. As well as the problems over fund size and rates for annuities, there is the perennial problem of people failing to shop around between pension providers, fueled by an abject lack of understanding about the annuity market. The cumulative effect for annuitants could mean that they have a smaller than expected pension pot to use to buy an annuity, the rates are less than they would have got a few years ago, and they maybe unaware that they needed to shop around to get the best deal. Despite recent attempts to improve information for potential annuitants, most people still go with the first offer made by their current provider.
