Broker Heath Lambert has launched a new online system which allows those about to retire to compare annuity quotes and purchase directly.
Buying an annuity is the way that most people turn their pension savings into retirement income. Many lose out, however, by accepting a lower sum from their current provider than they could get by shopping around and comparing quotes. This is particularly true of those in poor health, who could boost their pension income by as much as 30% by purchasing an enhanced annuity.
According to Health Lambert director, Stuart Grennan, around 40% of all retirees can qualify for an enhanced annuity due to medical or lifestyle reasons: ‘It is remarkable that leading pension providers have effectively got away with this comfortable status quo for so long. The majority of people at retirement in the UK do not trawl the market for the best income when converting their funds into an annuity.’
People with large pension savings usually benefit from an open market search undertaken by their financial adviser. Those with £40,000 or less struggle to obtain independent advice and may stay with their current provider simply due to practical difficulties. They can also be daunted by the detailed medical history annuity providers require and the lengthy questionnaire involved.
Heath Lambert’s new service offers a simplified online form with a limited number of questions. It provides quotes from mainstream provider Canada Life and enhanced annuity specialist Partnership. Customers can tailor their quote by choosing different annuity options. They can compare this to the offer from their current provider and purchase online if they decide to switch. Customers with a larger pension pot are offered a wider range of quotes (from 10 providers).
Which? pensions expert, Ian Robinson, said: ‘Shopping around is particularly difficult for those with modest pension savings. Anything which allows them to get a better deal is a welcome development. Those who qualify for an enhanced annuity could particularly stand to benefit.’
The new service has been welcomed by the charity, Diabetes UK, which will make it available on its website. Spokesman, Peter Hallett, said: ‘The comparison site is free, simple to use and allows people to find the best option to suit their needs. There are ten questions to answer, and there is no need to have a GP assessment.’
For more details about buying an annuity, read the Which? guide Annuities explained.
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