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Pension transfers cost consumers up to £1,400, says Virgin

Pension savers risk losing at least £1,400 during transfers when they buy an annuity despite industry initiatives to speed up the process, according to warnings from Virgin Money.

Virgin says the losses will be even higher if delays prevent savers from taking advantage of the best rates.

Its analysis shows the income on a £100,000 fund has fallen by around 8 per cent in the last six months, equivalent to approximately £600 a year.

Virgin is urging all annuity providers to back pension industry initiatives headed by the Association of British Insurers to cut waiting times with an agreed 30-days target.

Recent research by Virgin shows the worst offenders are delaying annuitisation by as much as 51 days or 10 working weeks.

It says for every week’s delay at the best rates, a 65-year-old will lose £138 a week in income while a 65-year-old woman will lose £129. A 10-week delay costs nearly £1,400 for a man and £1,290 for a woman.

Virgin Money spokeman Scott Mowbray says: “Buying an annuity is a one-off decision and one which retired people have to literally live with. With a fixed annuity the income you receive is fixed for life so the losses from delays are also fixed for life. There’s no second chance.

“The ABI has done excellent work with its Options programme and has genuinely cut average transfer times. However not all companies are backing its scheme and there are plenty of poor performers.

“The financial services industry should be doing everything possible to make the transfer process as smooth as possible so customers receive the best possible payout. The risk of losing thousands of pounds is a genuine threat.”

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