Why There's No Better Time to Look at Enhanced Annuities

What with the Bank of England's Quantitative Easing Programme (don't worry, you don't need to know the details of this is to see its negative effects on annuities) and the proposed EU rules regarding gender discrimination when related to annuity rates, it's no wonder that many of the UK's large insurers have dropped their average annuity rates by between 3% and 5% over the last month alone.

December of this year will see the introduction of a new EU rule that says insurers can no longer use gender as a criterion when determining the annuity rate offered to a retiree. At present gender is one of the biggest factors when calculating annuity rates, but take this out of the equation and thousands of males could see their potential retirement income plummet by up to 20% while females see theirs rise a little.

Obviously there is nothing you can do about the Bank of England or the new EU rules but there are ways to ensure you get the most from your pension pot.

Shop Around

Don't be tempted to buy an annuity from your pension provider just because the process looks simple and the application form is sent to you without asking. Yes, it would be your easiest option but it almost definitely won't be the most lucrative. All pension providers now have a legal obligation to inform you of your right to search the annuity market for a better deal, so take advantage and see if you can net yourself a few hundred pounds more each year to live on.

Recent research shows the difference between the best paying annuity and the worst at present (June 2012) equates to around £500 per annum, and for you this could mean the difference between life as a struggle and life in the comfortable lane.

Make the most of poor health

Very rarely in life do you want to admit to poor health but when it comes to annuity applications you want to do just that. This is because certain medical conditions and lifestyle choices will make you eligible for an enhanced annuity rate, and an enhanced rate could add up to 50% to your annual income.

Why is this? Simply put, insurers try to predict how long you will live when they give annuity rate quotes. So, if they can see that you smoke, or you drink, or you're overweight and have on-going medical conditions that could potentially shorten your life they take this into consideration. In other words, the fewer years they predict you have to live the more they will pay out while you're still alive.

Enhanced annuities aren't always advertised on normal internet comparison sites though and you will benefit greatly by allowing an annuity specialist to search the market for you. Contacting a specialist will also mean you get nothing but top quality independent advice that will benefit you and you alone.


Article Source: Mike Dobson