Shop around when reaching retirement age

Tue, 20 Sep 2005

People reaching retirement age should carefully weigh up their annuity options, the Bank of Scotland Annuity Service (BOSAS) said.

It estimated that 40 per cent of those reaching retirement age could be eligible for a bigger retirement pension if they opt for an impaired life or enhanced rate annuity, instead of a standard rate annuity.

Those eligible for the impaired life annuity because of illness could qualify for a retirement pension pot of up to 39 per cent more.

These annuities are available to people suffering ongoing medical conditions like diabetes, high blood pressure and high cholesterol because they have a reduced life expectancy.

The head of BOSAS, Craig Jones, urged people to shop around when weighing up their pension options: "When the time comes to retire the main concern for the majority of people is the amount of pension income they will receive and how they will manage on a reduced income.

"Therefore you would expect that most people would want to make sure that they get the pension deal possible."

However only an estimated ten per cent of people currently choose the enhanced annuity option when they reach retirement age, the Association of British Insurers said.

It also found that only a third use the Open Market Option.

"The Open Market Option means that you don't automatically buy an annuity from your pension provider but use an annuity broker to find the best deal," Mr Jones commented.

"To get the best deal it's essential to ensure the annuity broker is aware of any medical history which could lead to a greater pension income," he concluded.

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