It is not just QE that people looking for annuities should worry about!

Recent press articles have highlighted how Quantitative Easing (QE) is hitting annuity rates as the BoE continues to buy back government bonds, thereby depressing long term interest rates and as a consequence rates offered on annuities.

As if this was not enough to worry about, the National Association of Pension Funds (NAPF) in association with the Pensions Industry has just published a hard hitting report that describes the annuity market as “toxic”.  The market works against consumers at every turn according to the report – many of the half million people who retire each year are receiving less than they should from their pension due to the “sharp practices” and “murky pricing” used by insurers the report states.

One of the main problems is a lack of good advice – most people just stick with their current provider – a costly mistake that can cut your annual pension by up to 50%!   The insurance industry simply makes it far too difficult to access the best deal according to the NAPF.  They want everyone to automatically shop around for the best deal and have now called on the industry, regulators and employers to make this happen.

Our advice is to never accept the first annuity quote offered. Contact someone who specialises in annuity advice such as ourselves.  If you have any health issues inform your annuity provider/advisor, you could qualify for an enhanced rate. Also, look to merge any pension pots that you have – a larger sum could make getting financial advice more affordable.

Finally, get as much information about annuity options before you retire, there is only one chance to get the best deal.