Almost half of savers accept the annuity offered to them by their existing pension provider simply because they “trust” them according to figures released by specialist insurer Partnership.
49% of annuitants admitted to accepting the rate offered by their current provider without shopping around. According to Partnership's analysis, this decision could cost a person £5,106 over 20 years, and if they suffered from a condition such as Type 2 Diabetes this loss could be as much as £7,180, a whopping 23% of their potential income.
London-based savers were the least likely to be affected by not doing their research, while those located in the West Midlands and East Midlands were at the greatest risk from losing out with their pension fund for this reason.
The confessions of those yet to cash in their pensions were more comforting, and only 31% said they would stick with the company they had originally saved with, with 19% of this group saying that they would research, but would probably still stay with their current provider.
Andrew Megson, Managing Director of Retirement at Partnership said:
“This research clearly illustrates that blind trust can cost people a significant proportion of their retirement income so it is vital that consumers play an active part in their own at-retirement planning. Rather than trusting that they are going to get the best rate from their existing provider, they need to speak to an adviser or use one of the many online tools to ascertain whether what they are being offered is fair.”
“It is arguably even more important if you have a medical condition or have made lifestyle choices which may make you eligible for an enhanced annuity. Making the right decisions around retirement income can take time but if you weigh this against the benefits you can derive, it is clearly worth it.”