Customers who are already planning to shop around for their annuity are more likely to accept a lower price point to switch, settling for an extra income of £350 a year. The insight also shows that the value of a customer’s pension has no great impact on their ‘tipping point’ value, likewise those who intend to seek professional advice are also consistent with the total average.
Nick Flynn, director of retirement income at Canada Life said: “For those who choose to shop around for their annuity it can be easy to secure an extra £500 a year, or even more. Simply disclosing all lifestyle and medical information can lead to a welcome extra boost to your annual income which over time can add significant value. Over a typical retirement of 20 years, that extra £500 would equate to an extra £10,000 of additional income at no additional expense. Quite simply this is ‘free’ money.
“Remember, you can’t switch annuity provider once you’ve set up a plan, so getting the most value from your hard-earned savings up front is key. Never accept the first offer from your current pension provider, and do consider seeking help and advice.”
The Canada Life research suggests around two-thirds of DC pension plan customers who haven’t taken an income from it and intend to buy an annuity with at least some of their fund plan to seek advice from an adviser or shop around themselves before purchasing an annuity. A further 18% intend to set up their retirement income directly with their pension provider without the guidance of Pension Wise or the advice of a regulated financial adviser.
Nick Flynn comments: “The recent FCA data references 20 firms were involved in the sale of over 60,000 annuities last year, and yet there are only five providers competing for business in the open market. Make sure you use the open market option to not only to get the best rate, but also ensure you consider the full range of benefit options available.”
|
