Moneyfacts data, published earlier this week, revealed that 2013 was a record year for annuity rates with it posting the first annual rate increase in five years. But, it also made clear that there's no room for complacency when it comes to choosing annuities…
Annuity rates may be broadly improving, but there's still a stark difference between the best available and worst available rates. Given that your chosen annuity will determine the amount of income you get for the rest of your life, don't you want to get the best deal you can?
The figures show that the gap between the highest and lowest open market annuity rates have narrowed slightly in the last year – going from 19.9% to 17.4% – but this gap is still significant, particularly given that the typical retirement period lasts between 20 and 25 years.
There's an equally as big difference between the average enhanced annuity rate and that of a standard annuity, with an enhanced option typically being 17.6% higher. Again, this is why it's so important to never get complacent.
Anyone approaching retirement needs to make sure they choose the annuity that suits their circumstances to ensure they don't miss out on valuable income, which is why being thorough in your search and comparing all the options is vital.
Ultimately, choose poorly and you could potentially lose out on hundreds and even thousands of pounds over the course of your retirement – and that could seriously jeopardise the standard of living you were hoping for.
Richard Eagling, head of pensions at Moneyfacts, comments:
"Despite the good news that annuity rates increased across the board in 2013, it is important that this does not lull retirees into a false sense of security when it comes to choosing their annuity provider.
"Wide variations in pricing still remain, making it essential that individuals shop around for the best deal and flag up any health problems or lifestyle considerations that could boost their retirement income further."
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