One-in-three savers are eligible for a bigger payout due to poor health or bad habits. It’s time to be honest about your fitness, smoking and drinking. So-called “enhanced annuities” offer better value than a conventional annuity to people with long-term illnesses, as well as smokers, those with high cholesterol or the overweight.
More serious health conditions such as cancer, multiple sclerosis or stroke, may qualify for an “impaired annuity” where you receive additional income as you may have limited life expectancy. Give full details of your health when asking for a quote.
Step 4: Compare annuity rates to get the best deal
Once you’ve decided on the annuity type that’s right for you, shop around using a free comparison tool. The Money Advice Service or Age UK offer comparison services and are independent of the firms which sell annuities. Be aware that these don’t show every supplier. Some might have exclusive deals in place, or newer firms may not have uploaded their details to the website yet.
When shopping around, watch out for pension scams. Criminals interested in cheating savers of their pension pots are likely to cold-call people who are about to retire, offering investment schemes that are not covered by the regulator, bogus annuities, or claims that you will be able to access your pension before the age of 55.
Step 5: Pick a firm and transfer your pot
Once you have compared rates across a wide range of companies, having given full details of your health and your preference for single or joint income, it’s time to choose. You can buy an annuity direct from an insurance provider or you can go through a licensed insurance agent, an annuity broker or a financial adviser.