Three quarters of pensioners miss out on extra retirement income
Thousands of over-55s miss out on extra pension income by not declaring medical conditions or lifestyle choices, research reveals.
Poor health, as well as smoking and drinking, can actually increase the amount of money retirees receive from an annuity – an insurance product that pays a guaranteed annual income for life in exchange for some or all your pension pot.
But 76% of over-55s don’t know about ‘enhanced annuities’, meaning they could potentially be missing out on thousands of pounds in retirement income.
The reluctance to disclose this information comes from people’s experience buying other types of insurance products, according to research by Legal & General.
A survey of more than 2,000 people over-55 found that one in 10 think ill health will reduce pension pay outs, while one in five think it won’t make a difference to how much they get in retirement.
A further 5% believe that telling an annuity provider about a medical condition would mean their application is rejected.
Emma Byron, managing director at Legal & General, said customers are confused about how annuities work.
“People with health conditions, as well as smokers and drinkers, stand to benefit from better annuity rates – but only if they disclose everything to their financial adviser or annuity company. First and foremost, we need to help customers understand the potential benefits of annuities, which offer them a guaranteed income for life.
“Part of that is about education and information – but it’s also important that our industry talks plainly to consumers, removing the jargon and explaining the options available in a clear and helpful way. Just 26% of retirees have taken out an annuity, but there are thousands more who could benefit from a guaranteed income.”
Related: See YourMoney.com’s Could you qualify for an enhanced annuity (and not know about it?) for more information.