Using the Open Market Option to shop around for an Annuity could boost pension income considerably.
(PRWEB UK) 28 November 2013
The best retirement income from pension and savings pots is to many the key for a happy retirement, so why is it that so few shop around for the best deals?
According to the Association of British Insurers (ABI), 60% of people are happy to choose the annuity offered by their pension provider, unaware that a better solution may be available which could increase their retirement income; in some cases by thousands of pounds.
On the lead up to retirement, a person, depending on the type of pension they have paid into is usually presented with a number of options; one of which is to take an annuity offered by their pension provider. Whether swayed by their belief that it is the ‘easier option’, the ‘only option’, or the ‘best option’; currently two thirds of retirees take the annuity on offer, rejecting the ‘open market option’ which is basically their right to shop around.
Campaigning for the need for greater awareness, Over 50s personal finance website Over50choices has just launched its Annuity Service which includes comprehensive information, an annuity calculator which shows how much more pension income a person could receive and the ability to compare the best annuity rates on the market with the help of retirement experts Key Retirement Solutions.
Speaking on behalf of Over50choices, MD Ashley Shepherd said, “It’s criminal that retirees are losing out on thousands of pounds just because they are unaware of the options available to them. Using the open market option gives you the opportunity to choose the best rates and see if you qualify for an enhanced annuity.”
Annuity rates are based on a number of factors, one of which is life expectancy; so a shorter life expectancy could lead to greater retirement income. Therefore people with ill health or those who smoke could get a better deal; in fact the ABI states that 46% of people with health problems could get more money by exercising their right to shop around and choose the right annuity.
Ashley Shepherd goes on to say: “Once you have chosen an annuity, it can’t be changed so it’s imperative that the choice you make is the right one. We spend on average 20 years of our life in retirement so we need to make sure that our money works for us and provides the greatest level of retirement income possible.”
For more information on annuities and to use the annuity calculator click here.