Annuity Inertia
Why comparing annuities can give you more money in retirement
Eight out of ten people don't shop around for the best deal on their pension when they retire, yet everyone in this position is entitled to do so by exercising their open market option.
Although legislation introduced in 2003 obliges UK Insurers and Employer Pension Schemes to tell prospective retirees about this option, there is little evidence yet that many people are taking up their open market option.
Improve your pension income
Using the open market option could improve pension income by 15% or more for those in good health.
If you are a smoker or are not enjoying the best of health you could improve your income by 20% or more. This is because the insurance companies feel the individual's life expectancy is likely to be shorter than normal. Of course, if you then go on to have a long retirement, you will have the added bonus of a better pension!
If you have suffered serious ill-health you may qualify for what is called an impaired annuity. This can improve your income by 30% or more, depending on the exact nature of your health.
It pays to shop around. It doesn't cost and it may result in a much higher income in retirement.
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