Pensions warning over annuity delays

Tue, 09 Sep 2008

People saving towards a pension could miss out on as much as £10,000 because of delays in annuity transfers, it has been claimed.

According to research by Virgin Money, the loss in pension income can be caused both by payments not starting on time and a potential drop in annuity rates during this period.

Scott Mowbray, spokesperson for the firm, said: "With a fixed annuity the income you receive is fixed for life so the losses from delays are also fixed for life. There's no second chance."

A 0.5 per cent drop in annuity rates could see people lose around £500 a year in payments on a pension fund of £100,000, he added.

Pension firms and the Financial Services Authority should work together to ensure delays are kept to a minimum, Mr Mowbray stated.

Recently, a survey by Aon Consulting found that two-thirds of firms offering final salary pension schemes are planning on cutting contributions to the pot next year.
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