Pensioners ‘miss out on £124 million extra a year’
Pensioners failing to shop around for annuity providers are missing out on up to £124 million in income a year, analysis of customer data by Key Retirement Solutions shows.
Customers using Key’s free whole of market annuity service have gained an average 21% over their original quote – equivalent to an extra £248 a year on the median £25,000. With around 500,000 annuities bought a year that equates to around £124 million, KRS estimates
The equity release specialist launched its annuity service in July 2010 and is now established as one of the largest annuity specialists in the UK.
Analysis of its sales show the average customer using its service saw an annual income rise of £429 with some customers having more than doubled their income compared with the original quote from their pension provider.
A major factor in the increased income has been the number of customers qualifying for enhanced rates through medical and lifestyle conditions – 62% of Key customers have qualified for enhanced annuities.
Key believes the recent Code of Conduct launched by the Association of British Insurers on retirement income plus the growing number of customers purchasing annuities will further boost demand for its service and result in more individuals enjoying a wealthier retirement as a result.
Dean Mirfin, Group Director at Key Retirement Solutions (keyrs.co.uk), said: “It is simply wrong that people accept the default option from their pension provider when they could increase their income by on average 21% or more by simply taking a few minutes of their time to speak to a specialist.
“Someone who is retired for 25 years is effectively giving up on more than £10,000 if they miss out on an average £428 a year in income.
“Customers should shop around as the default and we continue to make this process as straight forward as possible, it only taking a matter of minutes to find out what income can be achieved plays a big part in this process.”
Currently around 500,000 annuities are bought a year and that figure is forecast to rise to 850,000 within two years as the numbers retiring increase, Key says.
Customers using Key’s services are always asked about health and lifestyle conditions to check whether they qualify for enhanced terms on their annuity.
An integral part of the service is to thoroughly explore all options for a customers retirement income. All customers are helped to select the appropriate options based on their circumstances. They are asked about levels of tax-free cash – Pension Commencement Lump Sum – they require as well as spouse or dependants’ benefits and whether they want to guarantee their income after death and whether they want level or increasing income.
For more information on Key’s annuity service go to keyrs.co.uk/annuities/