I read that millions of people are missing out on bigger pensions to which they are entitled!
Nearly two-thirds of retirees are failing to get the best deal and are being short-changed by as much as £1billion, figures announced by the National Association of Pension Funds. The National Association of Pension Funds say that insurers are able to deprive literally hundreds of thousands of retiring private-sector workers by up to £1billion a year. Simply by cashing in their hard earned pension pot. Every year, around approximately 450,000 people use their accrued pension to pay an insurance company for an annuity that gives them an income for life. But in a report earlier in 2012, The National Association of Pension Funds describes it as a ‘toxic’ system that short-changes thousands of people every day, leaving them struggling to pay their bills. It claims that in a ‘heavily manipulated’ market people accept annuities that pay far less than they could secure by simply shopping around. The National Association of Pension Funds say that this is situation because two-thirds, some 66% of people are unaware that they do not have to cash in their annuity with their pension provider. And are unaware they could obtain a much better Annuity deal using another provider. Some insurers fail to explain to their customers that people with certain medical conditions can get a better deal. Where doubts are raised is because the size of the annuity is crucial because it is a simple “one-off” no changing your mind decision that sets the size of your pension for the rest of your life. The National Association of Pension Funds report predicts that the annual loss to pensioners will triple over the next decade to around £3billion a year as yet more and more people become affected by this. What makes this problem worse is a few things. Firstly, the baby boom generation are now ending their working life, and a projected record 806,000 people will expect to retire this year. And secondly the Government’s plan to try and get every Brit into a pension scheme, will make even more people buy an annuity. And lastly, annuity rates have never been lower. And so the Poor rates also widen the gulf between private and public sector workers, as their (sometimes final salary) or gold-plated pensions mean they never have to buy an annuity. As even under the Government ‘s new reforms, they will still get a guaranteed pension, linked to their average salary.