Poor advice and a lack of professional guidance is causing pensioners in the UK to be short-changed by the tune of £14 million per year. This figure was uncovered by the Pension Income Choice Association who found that buying the wrong annuity was costing UK pensioners dearly. Because many annuitants fail to realise (or fail to be informed) that they are eligible for “enhanced annuities”, they miss out on up to 60% of the annual income they could have secured had they chosen the best deal available.
Whether to opt for an annuity or not is a decision an increasing number of people are likely to face in the future as traditional “final-salary” pension schemes are replaced with money purchase or defined contribution schemes. Unfortunately for UK pensioners, only around 40% currently exercise their right to shop around for a pension annuity, known as the open market option.
Laith Khalaf from penson giant Hargreaves Lansdown notes that the problem lies with the documentation provided by people’s current provider saying that…“…when you get a quote from your pension provider with a tempting little box saying sign here to start drawing your income, not only is that probably an uncompetitive rate but it almost certainly takes no account of whether you have any medical problems of whether you smoke, both of which can significantly increase your income for life.”
Billy Burrows of Burrows Cummins added that it was the duty of those advising and brokering annuities to consult ALL the providers who offer enhanced rates in order to secure the best offer for their client.
