Consumers should not be misled by annuity headline figures before forgoing their pension in exchange for what could be a guaranteed income, warns Punter Southall Aspire chief executive Steve Butler.
According to research by Legal and General, nearly one million workers aged 55 and over are considering annuities for retirement for the first time as their value soars against the backdrop of the increased cost of living with annuity rates increasing by about 40 per cent.
The research found that in order to ensure consistent incomes, prevent market volatility, and take advantage of increased rates, over a million people are thinking about annuities for the first time.
The research follows one conducted by Canada Life, which showed that average benchmark annuity rates have increased by 44 per cent since January 2022 and have hit a 14-year high in October.
Butler says: “Annuities have risen significantly and this is sensibly being reflected in greater interest from more people planning for life after work. Although rates have jumped enormously there is still a huge disparity between the value of annuities on offer.
“Shop around like you would for car insurance but it’s a bit different. You can always buy another motor policy once your deal comes to an end. Once you buy an annuity, there’s no going back. It’s a once-in-a-lifetime decision, not every couple of years. Make sure you have all the facts at your fingertips.
“Employers can play their part because employees look to them. Providing tailored guidance and online tools could prevent staff making a costly mistake and put them on the right path to making informed decisions about later life income.”
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