Virgin Money, in association with Partnership, asked 2,000 people what they hoped for (£17,278) and what they actually expected (£12,359) in terms of annual retirement income.
This research showed that despite expecting 29% less income than they would ideally like in retirement, the typical pension pot (£51,452) at annuitisation still fell short by £66,549 of being able to meet their more modest expected income levels. This stems both from a misunderstanding of how much the state pension will provide and from a shortfall in saving into private and occupational pension schemes.
To help people make the most of their pension savings, Virgin Money has teamed up with annuity specialist Partnership to offer a Pensions Annuity Service. The simple, straightforward process provides customers with information about the options available for retirement income and annuity choice, using a carefully selected panel of annuity providers. The service is open to anyone looking for an annuity – not just those with a Virgin Money pension – and is available both online and over the telephone.
The potential benefits for customers of choosing the right annuity at the right price are significant. The National Association of Pension Funds and the Pensions Institute estimate5 that in aggregate pension scheme members lose between £500m and £1bn per annum in lifetime annuity income by not shopping around.
Anthony Mooney, Director - Investments and Protection at Virgin Money said:
“This research shows that, sadly, many people entering retirement are not going to enjoy the level of income they are expecting. Given this savings shortfall, getting the best possible return by choosing the right annuity is crucial, but the prospect of looking at different annuities can seem daunting.”
“However, the potential benefits for pensioners from shopping around are huge, and that is why Virgin Money has teamed up with Partnership to provide a new service to provide all the information customers need, in a simple and straightforward way, to be able to make an informed choice. Buying an annuity is a once-in-a-lifetime decision which pensioners have to literally live with. The income is fixed for life and there are no second chances.”
