Aug 8 2008
A newspaper has commented on the differences between annuities and the importance of investigating them.
The Daily Telegraph has this week pointed out that annuities have an open market option, meaning people saving for retirement are free to agree one with any life company they choose.
Different annuities yield different returns – with 15 per cent between the best and the worst, according to the paper.
"That's a big difference when you remember this determines these pensioners' income for the rest of their lives," said finance writer Ian Cowie.
However, he went on to say less than half of those saving for retirement with an annuity bought one from another company than that running their employers' pension scheme.
People can be "baffled by the paperwork" involved in choosing an annuity, he continued, adding that the market does not make it clear that an open market option is available.
Halifax's Pension Health Check report, released this week, stated 45 per cent of those questioned knew the meaning of annuity.
