Three quarters of soon-to-be retirees could be losing out on a vital source of extra income by failing to shop around for their pension annuity, research from Just Retirement has revealed.
The study found that three quarters of over 55s questioned do not understand all of their retirement funding options, particularly the right to shop around for a better pension annuity
According to Just Retirement, as interest rates on savings accounts
continue to serve blows to retirement incomes
, the right annuity could considerably boost pension income for many.
In fact, Just Retirement has calculated that pensioners missed out on around £500million of additional income in the last year by failing to opt for an 'enhanced annuity' if they have underlying health or lifestyle issues.
Commenting, Nigel Barlow, head of technical services at Just Retirement said: "Unfortunately, the majority of people don't understand what an annuity is or what the implications are of converting a pension
fund onto a pension income…and do not realise that they could get a much better deal or that they're not getting the right kind of annuity income.
"Consumers spend up to 40 years of their lives saving for retirement but when it comes to converting the money into a regular income via an annuity, there is a huge lack of understanding."
He added: "It is critical that consumers are made aware of their options and seek advice on the right retirement income for their needs."Get annuity quotes and advice »
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