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Retirees told annuity choice is in their hands

Retirees told annuity choice is in their hands

Category: Annuities

Updated: 20/06/2013
First Published: 18/10/2010

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 It is now over 6 months old so the content may be out of date.

People approaching retirement have been reminded of the importance of shopping around for an annuity, after annuity rates continued to drop lower.

Analysis of data by MGM Advantage has revealed that the average conventional annuity rate fell by 3.65% in the three months between June 2010 and September 2010.

Payouts from enhanced annuities, which provide bigger pensions for those with serious medical conditions or with negative lifestyle factors, such as being overweight or a smoker, fell by 3.04% over the same period.

It means that since June last year, the average conventional annuity rate has fallen a staggering 6.98%, and the average enhanced annuity rate has slipped 5.32% lower.

"Our findings show the importance of shopping around for the best possible deal when buying an annuity, but sadly only around one in three people are moving providers for the best income," said Craig Fazzini-Jones, director at MGM Advantage.

"For the average person buying an annuity, they could be thousands of pounds worse off during their retirement if they don't shop around for the best deal."

The easiest way to find the best annuity deals is to take a look at our annuity best buy charts or use an online annuity planner service such as that offered by Premier Retirement Services.

Further highlighting the need to consider all the annuity deals which are available is the news that the gulf between the best and worst annuity rates for both conventional and enhanced products also continues to grow.

Looking at the annuity market as a whole, the average difference between the top and bottom annuity rates available is now 36.83% for men and 37.22% for women.

Meanwhile, those retirees who qualify for an enhanced annuity but opt for a conventional annuity instead are likely to be missing out on thousands of pounds in income.

Over the average retirement, a man with a £50,000 pension pot could be missing out on £12,490 by failing to choose the enhanced annuity, while a woman would be £14,101 worse off.

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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.