UK - Only a third of schemes seek the best annuity quotes and half do not offer enhanced or impaired life annuities, a new survey shows.
The survey by actuarial and consulting firm Aspen quizzed 64 trustees and found that although the average purchase price of an annuity was just under £30,000 only a third used specialist annuity advisers.
The survey also shows that a third of schemes were only obtaining one annuity quotation which, it said, suggested that the best rates were not always identified. Aspen also claimed that two-thirds did not provide information about investment and flexible annuities.
Aspen director of annuities Billy Burrows said: “There are a significant number of schemes that are not offering their members adequate choice or help.
“Although more schemes are improving the way in which they arrange annuities for members, many trustees are leaving themselves exposed to criticism if members subsequently find out they could have bought a higher annuity on the open market or qualified for an enhanced annuity.”
Aspen said that at current rates £30,000 would typically buy an annuity of £1395 per annum. It estimates that in five years’ time the average purchase price will be around £50,000, which will provide a pension of £2325.
Aspen said that while few annuities were currently being purchased by money purchase pension schemes this would increase significantly as the membership of these schemes grew and more members retired from such arrangements.
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