MGM Advantage has asked people who have purchased an annuity how truthful they were in declaring health and lifestyle factors. One in twenty (five per cent) of retired people who purchased an annuity said they either deliberately under-estimated smoking and drinking, did not declare one or more medical conditions or said bluntly they were not at all honest with their provider.
The enhanced annuity provider is urging anyone approaching retirement to be as open as possible with their financial adviser or pension company, as this can have a significant effect on the income they could receive from their pension pot.
Andrew Tully, MGM Advantage commented: "Although the majority of people are honest when filling in the forms to purchase an annuity, some people probably think being open about smoking, drinking or their weight will have a negative effect on the level of income they will receive. Nothing could be further from the truth. This is why it is vital people approaching retirement and considering their options are honest about any health or lifestyle condition they may have. This could have a significant and positive effect on the income they could receive from an annuity, as, on average, an enhanced annuity pays 23% more income than a standard annuity.
"Some people may feel that they can't discuss personal or medical information with their financial adviser. We have put in place telephone interviews with a team of trained specialists who can deal sensitively with customers and ensures we capture all the relevant information in one go to make the most of peoples hard earned savings."
MGM Advantage has published tips to help people make the most of the pension pot they have when converting that into a retirement income.
Tips for maximising your retirement income:
1. Look at all of your options at retirement, rather than simply the annuity on offer from your pension provider, for example the range of investment-linked annuities now available - as little as a 3% investment return is required to match the income on the best conventional annuity rate3
2. Think about your partner and family, considering whether to provide for them when you die through a guaranteed period or joint-life annuity
3. Consider how long you will enjoy retirement, and think about how your spending pattern will change over that time along with how inflation might affect your income
4. Always exercise your right to shop around for the best annuity rate, the difference can be as much as 30% or more4
5. Consider whether you might qualify for a better rate because you qualify for medical or lifestyle conditions, up to 70% of people who retire do qualify
6. Consider if you could take income in phases rather than all at once. This leaves some money invested for longer to grow and gives some flexibility around what choices you make in future
7. Seek professional financial advice to ensure you choose the best option or options for your needs
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