Pensions expert says ‘don’t write off annuities’ when choosing your pension

19 June 2018

A leading financial journalist has issued a warning to consumers deciding what to do with their pension pot. David Prosser’s striking message is that the majority of pension savers ‘would very often be better off with the safety net of an annuity’.

Writing in Money Week, David Prosser compares the options that people face at retirement. David says that income drawdown (where some or all of a pension pot is invested to provide an income) works for many people: “If you have a large pension fund and accept that your income may fall as well as rise over time, it’s reasonable to consider taking the risk of continuing to invest in the hope of securing more growth.”

He continues: “However, that does not describe the majority of pension savers. They would very often be better off with the safety net of an annuity. Indeed, even wealthy savers often choose to use part of their pension pot to buy an annuity, providing a baseline level of guaranteed income, and then invest the rest.” 

David also has good news about annuity rates, which fell considerably after the EU referendum but have since improved. He writes: “The benchmark annuity rate has actually risen more than 20% over the past two years, amid expectations of higher interest rates.”

More income potential from enhanced annuities 

David also refers to the potential for enhanced annuities to deliver even better income levels, writing: “Many people qualify for higher rates because of their health, lifestyle, occupation or even where they live.”

This is why Retirement Line’s Annuity Specialists are fully trained in the underwriting process. They are adept at asking the right searching questions to ensure that none of our customers miss the opportunity of an enhanced rate. (In fact, over 80% of our 2,000 monthly enquirers qualify for an enhanced rate, whereas the national average is around 60%.)

David ends his piece with some sound advice for anyone approaching retirement: “The golden rule about buying an annuity is never to take the income you are offered by your current pension-plan provider without checking first whether you can do better elsewhere. You have an absolute right to buy your annuity from another provider, and doing so will very often mean securing a higher rate of income.” 

Looking for an annuity?

If you are deciding what to do with your pension pot, contact Retirement Line for free, no-obligation information. We can shop around the annuity market on your behalf and provide you with the best rate for maximum income in your retirement.

Call our annuity specialists free on 0800 652 1316 or start the process online using our annuity calculator.