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Why are retirees missing a 40% income boost?

| 1 February 2013

Why are retirees missing a 40% income boost?

1 in 3 retirees don't shop around at retirement – and the Financial Services Authority wants to know why. Shopping around and declaring health and lifestyle conditions can boost the annuity rate you're offered by up to 40%.

So why don't more people shop around for their annuity? The FSA are set to investigate but we believe many people simply aren't aware they have the option to buy their annuity from a company other than their pension provider.

This lack of knowledge is costing retirees dearly - in the last decade they have missed out on £7 billion by simply accepting the retirement income offered by their pension provider.

Shop around for your annuity - don't make the same mistake

You don't have to accept the retirement income offered by your pension company. Buying your annuity is one of the most important financial transactions you will make. Once you have bought an annuity you cannot change your mind, so it's important to make the right choice. Shopping around is easy and you could receive significantly more income.

Shop around for your annuity in under two minutes

As you approach retirement your pension company tells you the value of your pension and how much income they would provide if you bought an annuity with them.

This is unlikely to be the highest income available. The annuity market is competitive and it is likely you will be able to improve on your pension provider's quote.

Furthermore, if you smoke or suffer from ill health you could be entitled to an extra boost or 'enhancement' to your annuity income – making it even more important you look beyond your pension provider.

Find out more about enhanced annuities

Four steps to a higher annuity income

1. Compare annuity rates free of charge

Armed with the value of your pension, use our online annuity calculator to compare the income offered by top annuity providers, against the income available from your pension provider.

You can compare different types of annuity including those with a pension for your spouse, or with inflation proofing. Make sure the comparisons are like-for-like.

2. Receive a higher annuity income for health conditions

Don't be coy about health. Annuity companies will pay a higher income to people with certain medical conditions, as much as 40% higher in some cases. There are over 1,500 conditions that qualify.

3. Make sure you're obtaining the best deal

Check the small print of your pension policy. In some cases the fund value and/or annuity rate is guaranteed at retirement or on specific anniversaries. This tends to be the case with older, with-profits plans and it's important to check your policy documents carefully before taking any action.

4. Complete the application form

Once you have chosen your annuity and the provider which offers the best terms for you, simply print the forms, complete and sign these and send them to Hargreaves Lansdown with the other documents on the checklist. We will then do everything else for you.

Annuity rates can change regularly and can go up and down in the future. Annuity quotes are usually guaranteed for just 14 days, so once you've decided to buy your annuity the sooner you submit your paperwork the better. If you have any questions, you can call our annuity specialists on 0117 980 9940 who are here to help.

Compare annuity incomes online now

The first step towards making sure you're receiving the best deal at retirement is find out what annuity rates are available to you. It will only take two minutes and could mean a higher income for the rest of your life.

Compare annuity rates online now

The value of investments can go down in value as well as up, so you could get back less than you invest. It is therefore important that you understand the risks and commitments. This website is not personal advice based on your circumstances. So you can make informed decisions for yourself we aim to provide you with the best information, best service and best prices. If you are unsure about the suitability of an investment please contact us for advice.

Get more from your pension at retirement

Our annuity service compares top providers rates in seconds and could mean more income for you.

Annuity service

Find out more about low cost income drawdown in the Vantage SIPP.

Income drawdown


  • A secure taxable income for life that will never run out.
  • You could increase your income by shopping around.
  • Cannot be changed or cancelled once set up - consider your options carefully.
  • Annuity rates change regularly and can go up and down. Quotes are valid for a limited period.

Income drawdown

  • You choose and review your own investments and level of income within limits.
  • Potential to grow income over time, but poor investment performance and excessive income withdrawals can deplete the fund leaving you short of income.
  • Wide investment choice including funds, shares and cash.
  • Offers flexibility but is complex and income is not secure.
  • If you're uncertain about its suitability for your circumstances please seek advice.
No news or research item is a personal recommendation to deal.

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