Nationwide has become the first high street banking institution to offer annuity advice to its customers, the building society announced today.
The service has been launched to help consumers get the best deal when converting their pension savings into an income by helping them shop around for the highest annuity rates and products that meet their needs.
A report commissioned by the National Association of Pension Funds (NAPF) last month stated that consumers could get an uplift in their retirement income of at least 20% by shopping around, yet one in three retirees are failing to do so. The news also comes as a new code of conduct for insurers launches to help consumers shop around for a better annuity.
Small pension pots welcomed by Nationwide
Those who have relatively low levels of pension savings for their retirement suffer disproportionately, as they are less likely to pay for advice and, consequently, do not shop around for the best rates.
Nationwide’s new annuity advice service will provide advice to anyone with pension savings of £18,000 and above. Given that the national average for pension savings is currently around £25,000, this should open up access to advice for a significant number of prospective retirees in the UK.
Nationwide looks to enhanced annuities as the default
One encouraging feature of Nationwide’s new annuity advice service is that it will discuss medical histories and lifestyles with each of its annuity customers, to see if they will qualify for an enhanced annuity.
Enhanced annuities pay higher levels of income as, in the eyes of the insurer, you’re likely to die sooner, and rates increase based upon life expectancy. It’s estimated that 40% of retirees could qualify for an enhanced annuity, which could give your retirement income a significant boost.
Limited annuity panel through Nationwide
Nationwide has a panel of six leading annuity providers, from which their advisers can recommend products. They are currently Aviva, Canada Life, Just Retirement, Legal & General, LV=, and Partnership.
Nationwide states that they have been selected on the ‘basis of their financial strength, customer service and competitive rates’. Between the six providers, they account for 88% of the entire annuity market.
Which? welcomes Nationwide’s annuity service
Which? pensions expert Ian Robinson commented on the launch: ‘While a panel of six falls short of a whole market search, Nationwide’s new service is good news for consumer choice. Accepting pension pots as small as £18,000 will help thousands of people unable to afford an IFA to get professional advice.
‘Those who qualify for an enhanced annuity should be particularly encouraged to shop around as their current provider may not offer one. Annuity choice is important too, so advice on different types and working out what you need is highly beneficial.’