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Nationwide launches Annuity Challenge to boost shopping around

21st January 2014 Print

Nationwide is challenging customers approaching retirement to shop around to secure the best annuity income - and if Nationwide’s Annuity Service can’t improve the customer’s pension provider’s offer, the customer will be given £250.
 
The aim of the Annuity Challenge is to prevent would-be retirees sleepwalking into choices in retirement that will leave them worse off over the long term. Many people approaching retirement are unaware that they can shop around with their pension pots – and that by doing so could achieve more income each and every year from an annuity, along with the potential for added benefits, such as spousal income and guaranteed payment periods.
 
Unfortunately many retirees simply accept the offer from their original pension schemes, known as ceding schemes, either out of a misplaced sense of loyalty, belief they have no choice or because they find the paperwork attached to their pension pots, the so-called ‘wake-up packs’ (the documents that alert those approaching retirement to make a choice about annuities) impenetrable and confusing.
 
The Nationwide Annuity Challenge states that Nationwide will increase the customer’s income in retirement by bettering the quote from at least one of their pension providers, and the Society is confident that this will be possible in the vast majority of cases. If not, the customer will receive £250.
 
Guy Simmonds, Head of Product – Protection & Investments, Nationwide Building Society, said: “Customers approaching retirement are about to make a decision that will affect their income for the rest of their lives. Yet too many are not investigating options that might really improve their quality of life in retirement by sleepwalking into accepting the first offer of an annuity they receive.
 
“The Annuity Challenge is a bold offer to customers to wake them up to the fact that an annuity is a long term investment where they have one chance to make the right decision, and by shopping around they could find a better annuity deal. They may be bombarded by paperwork or find it easy to tick a box on a form to accept an offer from their existing pension company, but it can have long-lasting consequences not to shop around for the best annuity deals.
 
“We have already helped thousands of customers with advice offered through Nationwide’s Annuity Service to find the best annuity deal from our panel of annuity providers, shape the pension that suits them and, through guiding customer through disclosure of health or lifestyle issues, secure an enhanced annuity offering a higher annual income.
 
“While our customers have on average enjoyed a 19% uplift on the annuity rate offered by their existing provider, by taking the time to understand the customer’s health and lifestyle we’ve helped just under 60% of our customers to qualify for an enhanced annuity. A number of other customers have seen uplifts up to 100% or more.
 
“Taking time to prepare for retirement and seeking advice can help enable customers to secure the most appropriate annuity and achieve a financially secure retirement.”
 
Since launching its annuity service, in March 2012, Nationwide annuity customers are on average 19% better off as a result of shopping around, representing a monetary value of an average extra annual income of £419.90. This equates to £7978.10 over 19 years, assuming an average life expectancy after the age of 65. The greatest uplift achieved for an individual customer of Nationwide’s Annuity Service was 183%.
 
Nationwide has also secured almost 60% of all annuities on an enhanced rather than conventional basis. The industry average indicates that approximately 20% of annuities are currently secured at an enhanced rate when customers shop around on the open market.
 
Nationwide’s Annuity Service is available to all customers approaching retirement with a total pension pot from £18,000. It offers access to a panel of leading providers, encourages customers to shop around for the best annuity option available and, where certain health conditions permit, directs customers towards potentially enhanced annuities for a higher monthly income.
 
Nationwide’s Annuity Service is available on an advised or non-advised basis and outlines customers’ financial options in retirement and supports them throughout the application process. For advice on annuities, there is a 3 per cent advice fee, which is payable from the remaining total pension fund after the tax-free lump sum has been taken.
 
It provides access through The Open Market Annuity Service to a panel of leading annuity providers, carefully chosen and regularly reviewed by Nationwide on the basis of their financial strength, customer service and competitive rates. There are currently six on the panel: Aviva, Canada Life, Just Retirement, Legal & General, LV=, and Partnership Life Assurance.