Retirees 'failing to shop around'

£20 poundsAlmost a third of retired people who have bought an annuity say they were not made aware by their pension provider that they could have shopped around, a study suggests.

The research follows calls to make the annuity market more transparent, with previous studies finding that failing to shop around for a better deal can wipe 30% off someone's annual pension income.
Age UK Enterprises, the commercial arm of Age UK, said that 31% of people it surveyed who had already bought an annuity and retired said that they were not made aware by their pension provider that they have the right to shop around for an annuity that best suits their needs.

When they retire, workers use their pension pot to buy an annuity, a decision which sets the size of their pension for life.

Annuity rates are linked to the yields on Government bonds, called gilts, which have also been dramatically reduced by recent rounds of quantitative easing, making it even more vital that people get the best deal.

Nearly four in 10 (38%) of those surveyed by Age UK Enterprises said they were not aware that certain medical conditions or lifestyle factors such as smoking could improve their annuity rate.

The research, which was made up of 70% retired people and 30% non-retired and aged over 60, also found that almost a third (29%) are feeling uncertain or negative about their current financial situation, with 27% of these saying this is due to the financial crisis hitting their pension pots.

One in 10 of people who felt negative said their pension pots had turned out to be much smaller than they had expected.

Gordon Morris, managing director of Age UK Enterprises, said: "This is a once in a lifetime purchase, so the industry as a whole has to do more to support customers and provide them with the information they need to pick the right product for their lifestyle and needs.

"Shopping around for the right type of annuity and the best rates is one way to enhance your income in later life. No one should simply accept the annuity offered by their pension provider; they should check first if other companies offer higher rates or a product that better suits their needs."
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