Financial advisers are underestimating the number of clients that qualify for enhanced annuities, according to retirement specialist, Tomorrow.
Research commissioned by Tomorrow, claims that 66% of adviser believe around 30% of their clients qualify for enhanced annuities but the real figure stands at 40%.
Tomorrow is concerned that one in ten IFA clients may not be receiving the best possible income in their retirement.
Matt Trott, product and marketing manager for annuities at Tomorrow, says: “Providers must work more closely with advisers and regulators to ensure that customers are aware of all the alternatives at retirement and how they can obtain professional financial advice.”
The survey also found despite many advisers not offering enhanced annuities to customers, almost three-quarters believe enhanced annuities will provide at least 10% more income compared with a standard annuity.
Almost half the advisers surveyed say that low public awareness of enhanced annuities is a major barrier to take-up.
Tomorrow have prepared an Enhancement Guide for adviser to use with their clients to identify those that qualify for an enhanced annuity.
According to Tomorrow, 120,000 consumers purchased a standard annuity when they could have qualified for the enhanced offering, meaning they will lose an aggregate £40m of income every year.
Trott comments: “We would like to see the industry working together to help educate the wider public of their options at retirement, and reduce the amount of income lost by pensioners every year.”
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