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Millions could be missing out on retirement income

Millions could be missing out on retirement income

Category: Annuities

Updated: 27/10/2011
First Published: 05/07/2010

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
Millions of people could be missing out on additional income in retirement as they are unaware that certain medical conditions could entitle them to a higher level of pension provision.

More than three quarters (77%) of British adults aged 55 and over said they were not aware of what types of condition would enable them to take out an enhanced annuity, according to MGM Advantage.

A pension annuity is essentially a guaranteed income for life paid by an insurance company and is bought with the proceeds of an employer's pension scheme or personal pension.

While almost six in ten people said they had a condition that would mean they were eligible to take out an enhanced annuity, it seems they are not sharing this potentially beneficial information with their providers.

With an estimated five million people aged 55 and over set to retire over the next five years, this could well prove a particularly expensive oversight.

This is because enhanced annuities pay out 24.09% more for men and 22.69% more for women.

For example, over the first five years of retirement, the difference between the amount paid out by an average standard and enhanced annuity is £3,823.50 for a man buying an annuity with £50,000, and £3,407.65 for a woman.

"Whilst it's encouraging that so many people aged 55 and over are having regular health checks, it's shocking that so few are aware that certain medical conditions would qualify them for an enhanced annuity and therefore increased retirement income," said Aston Goodey, sales and marketing director at MGM Advantage.

"In some cases, declaring a 'medical impairment' could result in an individual being thousands of pounds better off and make a real difference to their quality of life."

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