Choose your annuity for better retirement

Despite gloomy reports in the media, there are options to help pensioners make the most of their savings.

The issue of pensions have consistently made headlines in the past months, mostly resulting from desperate attempts by the coalition government to find funding for its various duties to the public.

Investigation into the issue has revealed that annuity rates have dropped to an all-time low, with the yields from annuities now being only about half of what they were 15 years ago.

According to an article in The Guardian, this need not be the end of the world for pensioners.

One of the best ways to make use of one’s pension money is for example by means of the “open market option.” This means shopping around for the best annuity option.

While the tendency is to take whatever the pension provider offers, the article suggests that a pensioner could get up to 40% more if looking for the best annuity option. George Ladds at Fair Investment Company mentioned that exercising this option is a right that pensioners should not ignore.

Mr Ladds gave the example of a customer whose pension provider quoted £181 per year when buying an annuity for almost £6,000, but ultimately got as much as £255 per year when looking for better options.

The Internet also plays its part in making things easier for pensioners. Several websites allow a search for annuity quotes, from which pensioners can then choose the best one.

Despite the temptation to do so, experts warn against delaying the purchase of an annuity at retirement. Surveys have shown that many do this to wait for improved rates in later months.

The danger is that, in the event that rates remain the same, potential annuity income is lost and can never be recovered.

The best option therefore appears to be to look for the best-yielding annuity and buying it as soon as possible.

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