A Joint-life annuity is not being considered enough as an option by those looking for an annuity, according to one industry expert. Dr Ros Altmann who is the Saga Director General noted that more needs to be done to inform people about the choices people have in retirement. Dr Altmann says that …”…too many people do not consider a joint life annuity, which risks leaving their partner with no private pension and dependent on means tested benefits.”
A joint-life annuity (which is applicable for couples) ensures that if one partner dies prematurely, an income will be continued to be paid to the other partner up until their death. The amount that is paid can be up to the full amount but is more often between 33% and 66%. Choosing a joint-life annuity as opposed to a single-life annuity can mean starting payments will be lower, especially if your partner is much younger than you and is therefore expected to outlive you. However they do offer security as under a single-life annuity, the income stops being paid when the annuitant passes away. If they don’t have any private pension provision, they will be left with just the state pension, having been used to a certain standard of living which could quickly become unaffordable.
The point about joint-life annuities is just one of a series of criticisms that has been leveled against insurers, who many argue are not as open as they could be about annuities as it suits them financially not to be. The apparent under-selling of enhanced annuities and lack of encouragement / enforcement to use the Open Market Option are two other issues where many industry observers want to see action from either the providers themselves or the regulators.