Up to 65 per cent of people retiring could be in line for a higher annuity from their pension because of their health, an annuity provider has said.
Just Retirement said research shows between 55 and 65 per cent of people taking out annuities – an income paid from a pension scheme – could have conditions that qualify them for enhanced or impaired health annuity.
Just Retirement said data, such as the General Lifestyle Survey (undertaken annually by the Office for National Statistics), suggested there were many people around the age of retirement who could increase their income by completing a medical questionnaire or shopping around the annuity market.
This is due to the high prevalence of lifestyle and medical conditions between the ages of 55 to 74. Just Retirement said the prevalence of smoking in this age group had declined but the prevalence of high alcohol consumption and obesity is surprisingly high.
Head of research at Just Retirement Nigel Barlow said: “The sophistication of underwriting by enhanced annuity providers has improved dramatically over the past six or seven years to take into account more combinations and lower levels of conditions.”
Barlow said figures from the 2008 General Lifestyle Survey showed 56 per cent of people aged between 65 and 74 reported a long-standing illness with 33 per cent reporting a limiting long-standing illness.
Just Retirement said over 1,500 conditions counted towards an annuity enhancement. Those who have suffered from cancer, ischaemic heart disease or a heart attack were often aware of the difference health conditions made to annuity income but people with diabetes might not be aware of the enhancement possibilities.
Barlow said the people were also often not aware of the annuity differences associated with lifestyle health conditions, such as obesity, high blood pressure and high cholesterol.
“We would recommend that people seek help with any of these factors and are aware of the health issues they can cause. If any of the factors are present at retirement, however, an enhanced annuity takes into account the effects and pays out an increased income to recognise this,” Barlow added.
The annuity industry has produced a Common Quotation Form for people to obtain quotes for annuities, with Just Retirement also stressing the importance of maximising the potential income from a pension, with annuity rates falling overall.
© Fair Investment Company Ltd