This could cost a typical annuitant £5,106 over 20 years (17% of their income) or £7,180 (23% of their income) if they had a common condition such as Type 2 Diabetes.
The specialist insurer polled more than 2,000 over-55s to understand more about the choices people make when they annuitise and why they decide to stay with the company they had saved with for their retirement. Of those who had already annuitised, 37% had simply accepted what their pension provider offered them and 12% undertook research before deciding that their pension provider would offer them the best annuity deal.
Of those who had yet to annuitise, the picture was slightly less worrying as up to 31% said they would take the annuity offered by the company they had saved with for retirement. Of these, 19% said they would do some research but probably take the annuity offered by their pension provider and 12% said they would simply accept the offer that they were given by their pension fund.
When asked why they had chosen, or would choose, to remain with their existing provider, 41% said that they ‘trusted their pension provider’ and 27% claimed that they had done their research and the company that they had saved with for retirement offered them the best deal. A further 25% said that ‘my pension pot is so small that anyone else is unlikely to give me more’ and 24% felt that it was ‘the easiest thing to do’.
People in the West Midlands (-20%) and the East Midlands (-20%) stood to lose the most by not shopping around while those in London (-14%) were less affected.
Andrew Megson, Managing Director of Retirement at Partnership comments:
“This research clearly illustrates that blind trust can cost people a significant proportion of their retirement income so it is vital that consumers play an active part in their own at-retirement planning. Rather than trusting that they are going to get the best rate from their existing provider, they need to speak to an adviser or use one of the many online tools to ascertain whether what they are being offered is fair.
“It is arguably even more important if you have a medical condition or have made lifestyle choices which may make you eligible for an enhanced annuity. Making the right decisions around retirement income can take time but if you weigh this against the benefits you can derive, it is clearly worth it.”
