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Watson Wyatt wants annuity supermarts

Watson Wyatt is calling for the Government&#39s annuity consultation to pave the way for annuity supermarkets.

Responding to last week&#39s pre-Budget statement which announced the consultation, the company is arguing that there should be scope for annuity supermarket services to ensure as many people as possible use their open market option.

Watson Wyatt is also att-empting to dispel what it sees as the popular fallacies about annuities as the pension industry prepares to respond to the consultation which is widely expected to be published in the new year.

It argues that many people incorrectly believe annuities mean investing in bonds and buying an annuity means investors lose all their pension savings if they die soon after retirement.

Watson Wyatt says it is possible to ensure that around 80 per cent of policyholders&#39 funds are protected from loss on early death by selecting an annuity which guarantees death benefits.

It also says many individuals falsely believe annuities represent poor value and life firms offering them make excessive profits. Watson Wyatt says academic studies shown that, generally, annuities have represented good value for money.

Partner Mike Wadsworth says: “There is scope to imp-rove and clarify the choices available, particularly in the area against loss of funds on early death. Scope for providing annuity supermarkets will allow people to maximise income in retirement. This will particularly benefit those with smaller pension funds at retirement.”

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