By Lois Avery
Annuity rates are falling, meaning that it’s more important than ever to shop around for your retirement income options.
New research from MGM Advantage shows that the majority of UK consumers are set to retire with a pension fund of less than £50,000.
The news comes in the same week as Confused.com became the first major comparison site to compare annuities, allowing those drawing their pension to seek out the best deal.
The new service will provide consumers with the ability to compare annuities from leading providers including Aviva, Prudential, Legal & General plus specialists such as LV= and Just Retirement.
Pension providers typically offer customers annuity rates upon reaching pensionable age, but research shows that, by taking advantage of the Open Market Option (OMO), retirees can often secure much more income for their money.
Despite this, the Association of British Insurers (ABI) says only a third of people buying an annuity in 2009 took advantage of this ability to shop around, with more than £5 billion of funds simply rolled over with the existing pension provider.
This means thousands could be missing out on a higher retirement income, and is all the more concerning given findings from MGM Advantage. Their Annuity Index shows that the average conventional annuity rate has fallen by a huge 6.98 per cent since June last year.
Craig Fazzini-Jones, director at MGM Advantage said: “The gulf between the best and worst annuity rates for conventional and enhanced products is becoming wider, and with rates in general falling it's more important than ever to consider alternative retirement income solutions that can really make the most of people's retirement savings.”
Confused Annuities enables individuals to check rates available from the leading annuity providers, tailoring the quotes to their own needs and investigating benefit options. For more information about the service and help choosing the right product for you, see our guide to annuities.
Matthew Lloyd, head of annuities at Confused.com, said: “Having worked hard to save for their retirement it's important that consumers find the best annuity available to them, it could make thousands of pounds difference, something that is definitely worth investing a little time in.
“When making major financial decisions like buying a house or a car people usually shop around first - choosing an annuity shouldn't be any different.”
