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Annuity alert for pension savers

Annuity alert for pension savers

Category: Annuities

Updated: 20/06/2013
First Published: 11/10/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Pension savers have been urged to think carefully about their annuity options after research revealed more than half of UK adults aged 40-plus who are not yet retired are at risk of losing all or part of their private pension income if one partner dies.

A new study from Prudential has revealed that 39% of couples do not have arrangements in place to ensure that pension income continues to be paid after the death of one partner.

Meanwhile, another 13% do not know what will happen to their pension income and other investments if their partner dies.

Worryingly, only 4% have talked with their partners about the difference between single life annuities, which stop paying when the purchaser dies, and joint life annuities, which continue to pay after the death of one partner.

"Talking about money can be difficult enough for many couples but clearly talking about death and money is a step too far for millions," said Vince Smith-Hughes, head of pensions development at Prudential.

"But it's time to speak up if more than half of all working couples aged 40-plus do not have arrangements in place to ensure pension income will continue after the death of one of them.

"You can choose a joint life annuity which will pay an income to a spouse or dependent after your death and alternatively, or as well, you can purchase a guarantee that the income will continue for a set period up to 10 years after the death of an annuitant."

If you're at the stage of life where you are considering using your pension pot to purchase an annuity, our annuity Best Buy tables reveal how the offerings from various annuity providers in the market compare.

We've also recently partnered up with Premier Retirement Services to provide you access to their online annuity planner service.

Choosing an annuity is likely to be one of the most important financial decisions you will ever make, so any time used researching the annuity market will most definitely be time well spent.

This message is particularly relevant to the two in three couples that have not discussed with their partners what happens to pensions and other investments in the event of one of them dying.

To this extent, those people contributing towards a pension but who have not yet retired should also make sure the pension pot that they are building up will go to the person they want it to should they die before they give up work.

As Mr Smith-Hughes adds: "For those still not yet retired, it is worth ensuring that whoever administers your pension scheme has written instructions to ensure the wishes of the member for disbursement of the pension fund upon death are known."

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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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