Are you getting the best annuity deal?
Many individuals seem to buy their annuity from their pension scheme provider almost by default. However, did you know that by doing so you may be missing out?
Insurers have been fiercely criticised for failing to make it clear individuals can shop around before buying an annuity and are not obliged to stay with the company where they have built up their pension pot. According to the Association of British Insurers (ABI), 45% of new annuities were purchased through a provider other than the consumer’s existing pension provider during 2011. This means that 55% of people remained with their pension plan provider and might have lost out on a better deal.
The ABI has introduced a new ‘Code of conduct on retirement choices’ to help individuals secure the best possible deal for their retirement income. Under the code, insurers now have to write to people approaching retirement to spell out their options. Insurers will have to explain the different ways that retirement income can be taken, including provision for dependants and the possibilities of an enhanced annuity and protection against inflation. Also, insurers are no longer allowed to include their own annuity application forms in their literature – a move designed to increase the likelihood individuals will shop around.
Some 400,000 people buy an annuity every year yet, according to the ABI, one in four do not believe they fully understand their retirement options, while one in three do not feel informed enough to compare quotes from another annuity provider. “Increasing life expectancy means that many people will be receiving a pension for longer than they were paying a mortgage,” commented the ABI. “The need to make the right decisions at retirement has never been more important.”
At Chilvester, we can compare the whole of the market to source the best standard and enhanced annuity rates. If you’d like to talk to us about your retirement options, please contact us for further information.