Annuities 'have no second chances'

28 June 2012

Older people who are looking into the benefits of annuities have been reminded they will only have one chance to pick such a product, so must pick the right one for their needs.

Joanne Segars, chief executive of the National Association of Pension Funds, stated there are no second chances when it comes to select an annuity and failing to get the correct one will lead to a person receiving a smaller amount of money for the rest of their life.

Speaking to the Daily Express, she explained this is a "huge problem" in the UK, with as many as half a million individuals being "short-changed" by £1 billion from their future pension income.

Shop around

Ms Segars highlighted the importance of individuals shopping around for annuities before making a final decision on the financial product, adding: "People with health conditions also need to study their options, as they may qualify for an enhanced annuity, which can be far more generous."

The National Association of Pension Funds representative also pointed out it is currently "too difficult" for consumers to find the best annuities deals on the market to suit their needs.

Ms Segars noted: "The market suffers from poor transparency," adding: "Although there are signs of improvement, more needs to be done."

Flexibility

Tom McPhail, head of pensions research at Hargreaves Lansdown, recently told the news provider that one of the main reasons annuities continue to be popular with a wide range of retirement finance products on the market at the present time is that they are flexible.

He noted some people have elected to delay their purchase of an annuity for a while in the hope that rates improve in the coming months and years, but pointed out this is a gamble.

Those who want to find out more about the annuities available to them could do so through Key.