View more on these topics

Smoke signals

Smoking is bad for you. We all know that. So are lots of other things. Double egg and chips every day at the local greasy spoon, no exercise, too many biscuits and pies, crossing a busy road while daydreaming and plugged into your i-Pod… it is a long, perhaps endless list.

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.


Wrap margins are starting to widen for IFAs

Nucleus says new data shows that advisers are now taking the lion’s share of the margin on its wrap while asset managers are receiving a smaller proportion.


Graphic content – May; UK economic data has finally turned for the worse

In June 2016, immediately before the Brexit referendum, a curious thing happened. Despite the colossal uncertainty facing the UK, economic data actually started to come in above consensus forecasts. Citi’s economic surprise index nudged into positive territory, which meant that UK economic data had on the whole outperformed consensus forecasts over the prior three months. […]


News and expert analysis straight to your inbox

Sign up


There are 2 comments at the moment, we would love to hear your opinion too.

  1. Smoke signals
    The biggest problem with At Retirement planning is that everything is shackled to annuity rates and the annuity trap has become the biggest turn-off to people putting money into a pension plan. That, and the lack of inheritability of unspent funds in retirement. Many providers are trying to come up with one solution or another within these fundamental contraints, but none is entirely satisfactory and almost all are offputtingly complicated, not to mention impossible to compare. What state of affairs is that in the 21st Century? Ridiculous. What is needed is a genuinely radical new approach to address these issues, so that retirement funding becomes both understandable for ordinary people and, above all else, attractive. For example (and I have proposed this before), why will the government not allow the creation of the Pension Income Bond, whereby income can be set at a level that the fund will be able to support until the pensioner attains the age of, say, 100 (or less for those with less than full life expectancy), allowing for a prudent level of investment growth of 5% p.a? In the event of early death, the remaining fund could (and indeed should) pass untaxed to the pension fund/s of the next generation. Depletion of the whole fund before death could be covered by an insurance premium, deductible at outset. Thus, the pensioner’s income would be secure for life, the government would get its pound of tax flesh and the next generation would have its own funds boosted as a result of early death. Simple. And, above all else, attractive. So why won’t the government listen? Because governments so rarely do and this one is even worse than most at listening.

  2. RJoI6A ktxgmehmuaej, [url=]sgkazkfjyeis[/url], [link=]fikzfyfoxreh[/link],

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm