A recent survey conducted by MGM advantage has shown that by opting for an annuity in retirement, you could make significant increases in your retirement income. Their data uncovered showed that during the recession, more people are willing to shop around for so called “big ticket” items such as cars and houses.
However, the number of people willing to shop around for the best deal on annuity rates is less than 12%. Moreover only one fifth of those questioned were aware that they are able to seek an alternative pension annuity, by using the open market option.
They took as an illustrative example, a female with a pension fund of £50,000 that lived for two decades after retirement. With the open market option they could be, on average, up to £11,000 better off. In fact this could increase to a whopping £15,000 if they were found to have medical conditions that could qualify them for an enhanced annuity. Experts in the pension industry are worried that us Brits are always keen to bargain over the cost of items such as cars or electrical goods, but are less willing or are unaware that we can do this with our pension income. The issue becomes even more imperative given the fact that once you buy an annuity, you cannot alter the terms or rates. Some have argued that the difference in income that individuals can obtain by shopping around for an annuity, can be the difference between being in poverty and not living in poverty in retirement.
The research also unveiled other interesting facts about the annuity market in the UK in 2009. 60% of those of bought an annuity choose their current pension provider.
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