The right to shop around with your pension fund at retirement to secure the best annuity income has been enshrined in UK law for some time now, yet a significant proportion of the retiring population still don’t use the open market option to find the best annuity rate for their retirement.
In the majority of cases retirees who do shop around will secure a significantly higher retirement income from their pension funds for the rest of their retired life. In addition to this, by taking advice the retiree could benefit from other options that may not be available from their current pension provider such as Enhanced Annuities, Invested Annuities and Fixed Term Annuities.
With 14 insurance companies offering their annuities on the open market the chances are that amongst them a higher annuity rate can be secured.
The UK annuity market has become increasingly more competitive in recent years with some companies specialising in Annuities for people with health problems or lifestyle issues such as heavy alcohol consumption, obesity and smoking.
A better annuity rate may not always be secured by shopping around as the highest rate could come from the company the retiree has saved with in the past.
Some pension schemes may have included within the contract guaranteed preferential rates called Guaranteed Annuity Rates, Guaranteed Minimum Pension or a Guaranteed fund value at a set age.
This highlights the importance of taking advice from a qualified professional adviser who will help determine the best route.
The government has provided a free useful annuity calculator to give a general guide to annuity rates available from the open market through the Money Advice Service:
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