22nd February 2018 at 2:03pm
We all want the best deals. It’s why we use comparison websites and do our research to find the best car, holiday or mortgage.
So why should your pension be any different? Whether you’re considering taking a flexible income or a guaranteed income for life (annuity), when it comes to taking your money, there’s no reason why you shouldn’t shop around to see what’s the best deal for you. You could get more for your money and be financially better off.
Compare the market for the best deal for you
Richard McCreadie, actuary for Standard Life believes – “When planning to access your pension, it’s really important that you shop around for the best deal, as regulation changes and a more flexible approach to retirement funding means you’ve now more choice than ever.”
It’s a sentiment shared by the Financial Conduct Authority (FCA) whose rules are designed to make the market fairer and more transparent for consumers.
When the FCA carried out research back in 2014, they found that eight in ten could have received a higher income during their retirement if they had shopped around and looked at offers from different providers.
Research shows eight in ten could have received a higher income during their retirement if they had shopped around
Source: Financial Conduct Authority, Thematic Review of Annuities, Feb 2014
Tips for shopping around
So, when browsing the shelves for the best deals out there:
- Check you’ll lose no valuable guarantees associated with your existing pension product
- Check if you’ll be charged a fee for moving your pot
- Make sure you give as much information as possible so providers can supply you with all the options available to you. For example, with annuities, if you smoke, are on medication or have a medical condition you could qualify for a higher guaranteed income (enhanced annuity). These tend to pay a higher income because they expect to pay out over a shorter time
And remember, when looking at the options available, it’s not always about price. Sometimes it can look like you’re paying more but you may want to balance these charges or costs against services that are on offer too. For example, the range of investment options available, online support and telephone services to help manage your pension and access to personal support when you need it.
Make sure you understand all your options for your pension by reading the Money Advice Service (MAS) guide ‘Your Pension it’s time to choose’, and seek guidance from Pension Wise. They provide some useful tips on how to shop around.
Also, if you’re looking to compare annuities then the MAS website has a handy comparison tool.
This blog and any responses are not financial advice and the information here is based on our understanding in February 2018.