ABI reveals full scale of annuity rip-offs

The ABI has today published annuity figures from all providers that suggest some annuitants will have lost more than half the value of their pension on retirement.

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The figures show a single 65-year old annuitising £18,000 who lives in Manchester could have received £839.52 a year from Scottish Widows, Clerical Medical or Halifax, yet would have received £1,099.92 from Reliance Mutual. If that individual had smoked for the last 10 years and had severe lung disease, they could have got £1,778.23 a year, more than twice as much.

The data shows that the uplift available from shopping around is considerably higher than had previously been thought, with most experts quoting potential uplifts in the region of 50 per cent for a combination of severe impairment and a whole of market search.

The ABI website publishes specimen annuity rates offered by its members based on 12 example customer profiles. The body stresses that it is not a price comparison website, but is designed to show what is available in the market, and of the need to get expert advice. The illustrations will be updated regularly.

The publication is part of the ABI’s Retirement Choices Code launched earlier this year. This initiative aims to help people approaching retirement better understand their options and to shop around for the best annuity for their circumstances.

ABI director general Otto Thoresen says: “Increasing life expectancy and an era of low interest rates makes the need to secure an adequate retirement income greater than ever. The industry is determined to do all it can to help people make the right decision to secure the best possible pension. The Retirement Choices Code will help people approaching retirement have the confidence to make the right pensions decision.”