Just Retirement group marketing director David Cooper says he welcomes increased awareness that a better deal is often available by switching provider at retirement. However, he warns that there is still some way to go in ensuring that everyone gets the best possible income.
New research from the firm shows 69 per cent of people would still rely on their existing pension provider to decide what to do about their finances on retirement. Given that the majority of people surveyed (64 per cent), believed that retirement would not result in a significant reduction in their living expenses, Cooper says it is imperative that they obtain the maximum possible income from their pension funds. It was also a matter of concern that 74 per cent of people are still not aware, for example, that if they are in ill health or have certain lifestyle conditions they could be entitled to an increased pension through enhanced or impaired annuities.
Cooper says failing to “shop around” could undo much of the effort made by advisers to select the right fund and pension scheme for a client.
He says: “With so much concentration on selecting the right fund managers to add value, allowing funds to rollover into an annuity with the holding provider could be equivalent to throwing away additional returns of 2.5 per cent per annum over 10 years pre-retirement.”