Pensioners missing out by not declaring medical conditions

A new study has found that many people are missing out on a better income in retirement by failing to shop around for an annuity and not declaring medical and lifestyle conditions.

The typical pension pot saved by a retiring Briton today is around £40,000. Over 400,000 people retire every year with a pension pot of less than £100,000 and currently only 8% of people with an annuity in the UK are receiving a better rate because of their health.

When it comes to buying an annuity the vast majority of people simply end up taking whatever is offered by their pension provider. However if people do not check out the other annuity rates available to them before committing to a locked-in-for-life pension annuity, they could be missing out on a significant sum.   According to research only 40% of people take advantage of the open market option, meaning that many people with average pension pots could be missing out on around £300 each and every year of their retirement. 

The new Saga Annuity Service pays either a flat rate of income or one that increases over time and includes enhanced options for those with medical conditions.

For many people there’s often a fear that revealing your smoking habit or type-2 diabetes to your pension provider will somehow negatively affect your payouts, however Saga offers enhanced options for people who disclose various medical conditions. These include:

- A man smoking 10 cigarettes a day for the last 12 years could benefit from an uplift of around 14% to his annual income.

- A woman diagnosed with type 2 diabetes, whose condition is controlled by diet alone may benefit from an uplift of around 18% a year.
 
- A man who has been smoking 15 cigarettes a day for 18 years and has diet controlled diabetes could be offered around 24% extra income.
 
- A man who has had a stroke could receive extra income of 35% a year.
 
Andrew Goodsell, Executive Chairman, Saga Group, said: “For too long, middle Britain has been doing the right thing and saving for their retirement; but then at the final hurdle many miss out on the best deals when they come to buy their annuity and are left out of pocket for the rest of their lives.  This is a locked-in-for-life decision and too many people are missing out.  More should be done by companies and the regulator to ensure that people take up the Open Market Option.” 

For more information visit: saga.co.uk/money-shop/annuity