The Financial Conduct Authority has announced proposals designed to ensure that retirees are better aware of the potential for an enhanced annuity. However, Retirement Line believes that consumers could still be in the dark about their full income potential.
Currently, when an individual’s pension scheme is coming to maturity, they are often provided with a quote for an annuity. This quote will be based only on information that the pension scheme has about the individual.
Many retirees will be eligible for an enhanced annuity, which pays higher rates to people with any of 1,500 qualifying medical or lifestyle issues, such as smoking. However, the pension provider is usually unaware of a customer’s health and therefore cannot provide an accurate quote.
This is what the FCA proposes in its Consultation Paper¹ to remedy the situation:
At Retirement Line we welcome any measures to increase awareness of enhanced annuities. One concern we have, however, is that there needs to be consistency in the method by which the enhanced quote is calculated.
For some years we believe we have been the consumer’s champion when it comes to getting the best enhanced annuity. We can do this because we have invested in technology that enables us to secure quotes from the UK’s leading enhanced annuity providers. Also, regular underwriting training enables our annuity specialists to unearth answers to the right questions about customers’ health and lifestyle.
We are concerned that providers don’t necessarily have the systems, expertise or resources to generate ‘the highest quote available on the open market’ that the FCA is calling for. Retirees could be sent what is labelled as the best enhanced quote, but it could fall short without an intensive review of their personal circumstances This could significantly reduce their long-term income in retirement.
We have raised this concern with the FCA as part of the consultation process and await the outcome. In the meantime, Retirement Line is here to work hard on behalf of anyone enquiring about an annuity. We remain committed to obtaining the best quote and the best retirement income for our customers.
Enquirers to Retirement Line are made fully aware of the availability of enhanced annuities. We ask the right detailed questions to ensure they receive the highest enhanced rates. Our annuity specialists’ knowledge and experience ensures over 80% of our 2,000 monthly enquirers qualify for an enhanced rate.
Please contact us on 0800 652 1316 or firstname.lastname@example.org if you would like to find out if you are eligible for an enhanced annuity, and what the best rate would be.
¹ FCA Consultation Paper CP18/17, June 2018.