It is crucial that you understand that your existing pension provider will not necessarily be the best company to buy your annuity from. Most pension plans allow those retiring to use the Open Market Option known as “OMO”. The term, ‘Open Market Option’ is a fancy way of saying that you have a right to buy a Lifetime Annuity from any annuity provider who will offer you one.
All annuity providers offer different rates of income and just like with car insurance, some offer better deals than others in order to attract your business.
We recently helped one of our clients buy an annuity income with his pension pot which he had accumulated within his Group Personal Pension (GPP).
Our client, who is 65, had a pension fund of £150,000 after taking £50,000 tax free cash and was offered a level pension from his existing provider of £7,771.68 per annum. Having established that the client has been a smoker for the last 20 years, we were able to secure a level pension of £10,462.68 from another provider which is an increase of £2,691 every year for his lifetime.
Even if you have no medical or lifestyle conditions, the difference in income that you would receive from the provider offering the best annuity rate compared to the one offering the worst can add up to many thousands of pounds over the course of your retirement.
If you are coming up to retirement, please do contact one of our consultants and we will be able to research the whole of the market to obtain the best pension income for your retirement pot.