An industry expert has warned that retirees could lose over half their retirement income by not shopping around when looking for a pension annuity. Under the present system, retirees are sent a ‘wake-up’ pack around six months before their stated retirement date which outlines the various options for their retirement finances. Included in this is the advice that they are able to shop around between providers for an annuity. However, this can be time consuming, with many retirees choosing not to go through this process as they are seemingly unaware of it’s importance. Most annuitants stick with the first offer given from their current provider, which is most cases is not the best deal for them.
Laith Khalaf from retirement specialists Hargreaves Lansdown noted the difference in income that can be gained by using the Open Market Option. He said that…“…pensioners could net themselves thousands of extra pounds simply by shopping around for an annuity. “Typically the difference between best and worst rates is around 20 per cent, but we have had clients tell us that the income we arranged for them was up to 60 per cent higher than what their pension provider had offered. That income is then paid year in year out for life.”
The government has now asked pension annuity providers why so many of their customers are failing to compare rates between rival providers. Another industry expert, Gemma Goodman from The Annuity Bureau said that many people live with ‘second rate’ pensions as they did not shop around for an annuity.
