Pensioners fail to get best annuity

Posted on May 24th, 2011 | Categories - Annuities

Declaring health conditions can result in higher Annuity incomes.

People nearing retirement do not know that they can get a better Annuity by discussing their health issues with their provider.

Pensioners are missing out on getting an optimum retirement income by failing to inform providers of their medical history.

A new study from Annuity specialist Just Retirement found that seven out of ten people approaching retirement can qualify for an Impaired Annuity that takes an applicant’s health issues into consideration – many consumers are unaware that declaring their medical problems could work to maximise their income.

Others could qualify for an Enhanced Annuity, which pays a higher annuity rate to people with particular lifestyles, such as the obese or smokers. Generally providers can afford to pay out more with this form of Annuity because these groups of people tend to have a lower life expectancy.

Steve Lowe from Just Retirement said: “A lot of individuals are simply not aware that reporting mild and less serious conditions can increase their income by between 10 and 20%. At a time when pension funds have been falling and annuity rates dropping, it is important that pensioners do everything possible to maximise the income they receive”.

He added: “Customers are unaware of the size of the prize available to them. To ensure customers don’t miss out on thousands of pounds of retirement income they should shop around”.

Clive Bolton, retirement director at Aviva, said many people are afraid that if they inform their provider of the health conditions they suffer with they will receive a smaller income. The study also showed that over a fifth of participants believed their income would decrease rather than increase due to medical conditions.

Mr Bolton said: “Consumers may be missing out on significant retirement income in their lifetime due to a lack of understanding about annuities and how to find the best annuity for their own situation“.