Pensioners losing out on £60m a year in income

12 November 2009 4:56 pm | By Lee Jones

The IFA has also calculated that the Government is losing around £12m a year in lost tax revenue by not enforcing the open market option.

Annuity Direct chief executive Bob Bullivant says, on average, his clients have gained 20 per cent more income by shopping around for an annuity.

He says: “By applying this average to national figures, we calculate those swapping their pension funds for an annuity - around 460,000 per year - are losing out on nearly £60m. It’s a lot of money, yet the big pension providers are sitting pretty.”

Bullivant says the millions lost would also in turn generate tax revenues through income tax and VAT, which means the Treasury could be losing out on as much as £12m per year.

He says: “I fail to understand why it is that the Government has not taken decisive action to ensure that pensioners maximise their retirement income by exercising the open market option.

Annuity Direct says around 35 per cent of pensioners are currently unaware that they can shop around for a retirement fund.

Bullivant says: “Because of continual Government dithering, the real winners are the life companies whose intransigence is adding to their balance sheet. Until we get some reality into the system, pensioners will continue to get a poor deal on their annuity and the Government will continue to lose much needed tax revenue.”

If you enjoyed this article, sign up here to receive daily email updates from Money Marketing and Follow @_moneymarketing