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Retirees miss £1,000s by not switching pension provider

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Consumers are missing out on £130m by sticking with the same pension provider after retirement, according to a major insurance group.

In 2016, around 30,000 retirees could have got an average of £4,000 more over the course of their retirement by switching annuity provider, finds research conducted by the Pensions Policy Institute for LV=.

The research also showed that retirees are increasingly expecting their retirement income to cover more than just essentials. Nearly six in ten (57%) of those planning to retire in the next five years want their retirement income to cover home maintenance costs, while 53% want it to cover holidays and a quarter (24%) say they’d like to leave money behind as an inheritance.

One in six (17%) want to be able to use their retirement income to help their children or grandchildren with a property purchase, and 14% would like care costs to be covered as well.

Only around 25% of retirees currently take advice, even though three quarters (75%) of those who took advice believe it helped them get more for their money at the point of retirement. People planning their retirement are now able to withdraw up to £1,500 from their pension pots tax-free to pay for financial advice, under plans unveiled by the government in the 2016 Autumn Statement.

John Perks, managing director of life and pensions at LV=, said: “Last year alone consumers missed out on a staggering £130 million over their retirement by sticking with the same provider when taking out an annuity. This is echoed across the retirement space with consumers failing to access the best retirement products. People are expecting their pension pot to stretch even further nowadays so it’s crucial they take control and get support to help them get the most from their savings.

“Government has a vital role to play in encouraging people to take advice and therefore we are urging it to maintain momentum on the financial advice reforms to ensure retirees can get the right retirement solutions for their needs.”

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