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Many could be missing out on retirement income

Many could be missing out on retirement income

Category: Annuities

Updated: 20/09/2010
First Published: 20/09/2010

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 It is now over 6 months old so the content may be out of date.

Many people could be missing out on increased income from their pension funds as they are unaware that they could qualify for an enhanced annuity.

Recent figures from Towers Watson showed sales of the products, which provide bigger pensions for those with serious medical conditions or with negative lifestyle factors such as weight, smoking and occupation, amounted to £1.26 billion in the first half of 2010.

It represents a 41% rise compared with the second quarter of 2009.

Despite an increasing take-up of enhanced annuities, research from Just Retirement has found that many people could be missing out as they do not realise they could be entitled to one.

Figures show that between 55% and 65% of those retiring may have conditions that qualify them for an enhanced or impaired life annuity, but such products make up just 12% of all annuity sales.

There are more than 1,500 conditions that count towards an enhancement, such as high blood pressure or diabetes, but many people approaching retirement fail to realise that such ailments could mean a boost in retirement income.

Nigel Barlow, head of research at Just Retirement, said that while the smoker annuity is well known, many people are still unaware of the effect that high alcohol consumption, obesity, high blood pressure and high cholesterol can have.

"We would recommend that people seek help with any of these factors and are aware of the health issuers they can cause," he added.

"If any of the factors are present at retirement, however, an enhanced annuity takes into account the effects and pays out an increased income to recognise this. "

The value of finding the right annuity was highlighted recently by research that found rates had fallen to an all time low.

Our annuity Best Buy tables reveal how the offerings from various annuity providers in the market compare, including names such as Saga and MGM Advantage.

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.

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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.