Breaking News Feb 2012
The National Association of Pension Funds (NAPF) has just released a report outlining many barriers retirees face when changing their pension into an income. The NAPF say that the process is fraught with confusing paperwork and obstacles that prevent people shopping around for the best deals.
It said that the pension companies that sell annuities were guilty of “sharp practice and murky pricing”. To someone who has never had to deal with annuities before, or who after retirement, will have to again, this is what it is perceived as.
“The process for choosing an annuity is a complex one and the majority still go for the “default” option by sticking with their pension scheme provider,” the NAPF said. This is where a retirement specialist should be used but many don’t realise the down falls of not shopping around. Failure to shop around for the best annuity rates can wipe up to 50 per cent off a person’s annual pension income, the report found.
“People are being short-changed by a toxic system,” said Joanne Segars, the chief executive of the NAPF, which represents 1,200 pension schemes with 15 million members.
“Lower and middle income workers are especially vulnerable – too many end up stuck with the wrong annuity at a bad price,”
The NAPF used research carried out by the Pensions Institute, a department of the Cass Business School in London.
This report further cements what retirement specialists have been trying to encourage people to do for years. The choices you make with your pension fund will affect the level of income you receive for the rest of your life. It’s for this reason you should ensure you have explored all the options available by using the Open Market Option and shopping around.
