But when it comes to life expectancy, smoking holds a special place with the jolly bunch who determine how long we are likely to live. It is not alone, of course. Other factors – obesity, high blood pressure, genetically inherited conditions – there are a host of issues which contribute to shortened lives. They have all in their turn contributed to the dyn-amic rise of perhaps the biggest growth area in retire- ment planning in the past few years -impaired annuities.
Smokers in particular are able to boost their retirement income by thousands of pounds a year, according to the latest figures devel- oped by the Rockingham Retirement research team.
Pensioners who smoke or who suffer from ill health can look forward to a much more affluent lifestyle if they seek an impaired annuity deal when they cash in their pension pot instead of accepting the default option. Our research reveals that an impaired annuity could put an extra £3,500 a year in the pocket of a 65-year-old male with a £100,000 fund – enough to make a big difference to his quality of life in retirement. For example, a male aged 65 with a pension fund of £100,000 with Axa could receive an annual income of £5,852.00 if he does nothing and accepts the default option equal to Axa’s commercial annuity rate.
Peace of mind
Yet if he makes the effort to find the best non-enhanced rate on the market – currently with Aegon Scottish Equitable – this would increase to £7,148.04.
But if he is suffering from ill health, his income could soar – to £9,373.08 or more. This is an actual annuity quote from MGM Advantage based on a non-smoker suffering from severe cardiac infarction. That is a difference of over £3,500, enough for a holiday of a lifetime – and that is every year for the rest of his life – or simply the peace of mind of having an extra £300 a month to live on. The table below gives a good idea.
The rates payable do depend on the illness and the severity of the condition and the best person to ask is an annuities specialist.
RR brokers every single enhanced annuity provider in the UK – all 13 of them. The company sweeps the market several times a day for hundreds of clients and the clients benefit enormously.
Our sister operation, The Annuity Clearing House, will be launching next month in partnership with Prudential, L&G and MGM Assurance, offering excellent deals to IFAs wanting a quick, simple and profitable solution for their client’s annuity requirements.
Take one of our recent clients, Richard Browning, a 64-year-old living in Ayelsbury, Bucks. A smoker, Browning was recently contacted by his pension provider informing him that it was time to take an annuity from his pension.
Rather than take the deal offered to him, he contacted us. The quote we found – £6,425.00 a year from LV= -was £2,600 more than his own pension provider offered him.
Recent research has shown that enhanced annuities pay out on average 22 per cent more than standard annuities in annual retirement income.
So you would be mad not to go for it if you had a qualifying condition but I fear that many pensioners lose out on crucial income because their adviser is unable to trawl the whole of the impaired market.