Warning over pensions annuities

Wed, 19 Mar 2008

Those approaching retirement have been warned of the cost of delaying the purchase of a pension annuity .

According to research by Just Retirement, a 65-year-old with a pension fund of £50,000 deferred their annuity purchase by one year could take 13 years to recoup the lost funds .

Nigel Barlow, head of retirement income solutions at the firm, explained that during periods of economic uncertainty, people might think it is wise to defer buying their annuity, especially if their pension account has fallen in value over recent months.

"However, while this may be the right decision for some, it is also a risk and depends on how certain you are that the markets will recover during this period, and also how certain that annuity rates will improve," he concluded.

On Friday, Joanne Segars of the National Association of Pension Funds, welcomed a reduction of costs for some pension accounts announced in the budget.
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