Boost your annuity income

There are two important ways to boost your annuity income that the vast majority of retired people miss out on.

1. The open market option

According to annuity provider Just Retirement, seven out of ten people make the mistake of buying their annuity from the company with which they invested their pension. This can mean you miss out on a huge chunk of retirement income.

Failing to shop around for the best annuity rate might undo much of the effort made in selecting the right fund and pension scheme in the first place.

With so much focus on selecting the right fund managers to add value, allowing funds to roll over into an annuity with the holding provider might be equivalent to throwing away additional returns of 2.5 per cent a year over 10 years before retirement.

2. Enhanced annuities

Seven out of ten people, says Just Retirement, are unaware their health or lifestyle might qualify them for an increased annuity. If you smoke or have a serious medical condition, you may be able to get a higher value annuity, as insurers recognise these factors can affect your life expectancy. Just Retirement estimates up to 40 per cent of people could receive a higher income at retirement thanks to enhanced or impaired annuities.

You don't have to be a particularly heavy smoker - 10 cigarettes a day for the past 10 years will qualify you for enhanced rates. Illnesses that qualify for enhanced annuities include diabetes, liver impairment, heart conditions and many types of cancer, whether or not you are in remission.

If your spouse is also on your annuity, don't forget to take his or her health into consideration, as this could also improve rates.

Don't just buy your annuity from the company that you invested your money with - get independent financial advice and you could enhance your pension considerably.