UK retirees could be missing out on up to £56.6m of retirement income each year by not purchasing an enhanced annuity, new research suggests.
LV='s 'Missing Income' report highlights over 150,000 people could increase their income in retirement by taking an enhanced, rather than a standard, annuity.
Despite the UK enhanced annuity market growing by nearly a third (31.9%) in 2008, it is still a long way short of the four out of ten annuitants that LV= estimates could qualify for some form of enhancement, and therefore a higher annual income in retirement.
"It's definitely a positive sign that the enhanced annuity market is growing. More people are taking up the Open Market Option, which allows them to buy an annuity from the most suitable provider for them," says Matt Trott, LV= head of annuities.
"However, thousands of annuitants are still missing out on a higher income in retirement. Just 27,482 annuitants purchased an enhanced annuity in 2008."
Trott says people can't afford to miss out on the chance of increasing their income in retirement.
"A lot of annuitants still feel uncomfortable about revealing lifestyle or medical conditions to a financial adviser. However, if people are open about their smoking habit, or the fact that they suffer from diabetes, it will ultimately help them secure extra income for their retirement - so it's vital they are upfront about these aspects".
LV= says it is also vital for financial advisers to inform their clients of the availability of enhanced annuities, and the benefits they can bring.
"Financial advisers should always consider enhanced annuities when they write new business, so they can be sure they are meeting individual customers' need," says Trott.
"This, plus more openness from people about their medical or lifestyle conditions, will help to ensure that the missing £millions end up in the right place, the pockets of ordinary people who need to maximise their income in retirement."
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