Best vs. worst annuity rates – don’t miss out on a bigger income for life

14 April 2016

One year on from the introduction of the chancellor’s pension freedoms, industry figures published have revealed annuities are enjoying a major revival in popularity.

Around 21,200 savers ploughed £1.1billion into pension annuities in the final three months of 2015*, with the number of sales outstripping riskier alternatives which invest in the stock market, for the first time since the reforms came into play last year.

With annuities surging in popularity, it is vital that savers understand the importance of instructing a specialist to search the market on their behalf for the best rates before committing. Industry figures have revealed the difference in resulting income can amount to thousands of pounds over the course of a person’s retirement.

Over £11,000 more income

Latest figures from retirement income specialist Retirement Line demonstrate that the difference in retirement income between the best and worst conventional annuity rates available for a person aged 60 can equate to £11,258 over 20 years. 

Today, a 60-year-old buying a conventional annuity with an average sized pension pot of £69,517**, couldsecure a best available rate of 4.84% - achieving an annual income of £3,371.28. The worst available rate of 4.03% would achieve just £2,808.36 in annual income.

If that same person discovered they qualify for enhanced terms (due to a pre-existing medical condition or a history of smoking, for example) then they could bump their annual income up to £3,857.52 with the best available enhanced rate of 5.54% - an income of £77,150.40 over 20 years.

It means a person who qualifies for this best rate enhanced annuity can enjoy a huge £20,983.20 more income over 20 years than if they settled for the worst available conventional annuity rate that might have been offered to them by their existing provider.

The benefits of using a retirement income specialist

Many people do not realise that you do not have to purchase your pension annuity from the company or companies that currently hold your pension fund. When you approach retirement they will tell you how much income you could receive from them with your fund, but you have the right to search for a better deal with someone else.

Of course, searching the entire market for a better rate may seem like a daunting task, but a specialist like Retirement Line can do all the work for you.

Savers who do not seek the assistance of a specialist before annuitising are at risk of committing to a product that is neither competitive nor tailored to their individual needs and circumstances.

Thanks to our specialist knowledge and training, a huge 86% of Retirement Line’s enquirers qualify for an enhanced annuity, with common conditions such as high blood pressure and high cholesterol qualifying thousands of retirees for a better return on their savings.

Speak to us

If you are ready to start receiving your retirement income in the next few months, make sure you speak to one of our retirement income specialists before committing to anything. You could enjoy thousands of pounds more income over your retirement with our expert service.

Call our specialist team today on 0800 652 1316.

Retirement Line work on a non-advised basis.  Ifyou are at all unsure of which options suit you, you should seekregulated advice.

*Association of British Insurers March 2016
**Average pension fund of Retirement Line customers in 2015