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Pensioners lose up to £10k due to annuity transfer delays, says Virgin Money

Pension savers risk losing as much as £10,000 because of delays in transferring funds into retirement income, according to a warning from Virgin Money.

It says delays in processing annuity transfers mean payouts do not start on time and annuity rates could drop during any delay in sorting out paperwork.

The FSA’s research into annuity delays in July revealed that six out of 10 customers converting pension funds into annuities faced delays in receiving their payout.

Virgin Money says annuity rates are at a six-year high as the credit crunch means yields on bonds and Government gilts have increased, in turn boosting annuity rates. However annuity rates change month by month and the possibility of cuts in UK interest rates may push them lower.

Virgin Money says it pledges to send out maturity forms to its pension customers within five working days when they request an annuity transfer form and to send a cheque to the annuity provider within a day of receiving completed forms.

Spokesman Scott Mowbray says: “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 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 for life is a genuine threat.”

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