Every week of delay by companies helping you convert your savings into pension income can cost you up to £127, according to new figures just revealed by Virgin Money.
A 65 year old man with pension savings of £100,000 in his pensions pot could stand to receive an annual income of £6,651, once his annuity has been set up. This means a weekly income of £127. The corresponding pension income for 1 week for a woman would be £120 – slightly lower because women have higher life expectancy than men, and draw their pensions for longer.
Virgin calculates, therefore, that a pensions annuity provider that drags its heels in setting up a pensions annuity will cost the above savers £127 and £120 per week, respectively.
With the worst offenders among pensions annuity providers taking up to 50 days (10 weeks) to complete the transaction, the losses for the man and woman spiral to £1,270 and £1,200 respectively.
Shop around with your pensions savings
Further losses of pension savings can be unwittingly incurred by those who do not compare annuity rates, as part of their pensions planning.
A recent spot check on pension annuity rates, again using a pension fund of £100,000, found that the best annuity deal at that moment gave a pension income of £5,628 per year, while the lowest, from a different household name provider, gave pension income of just £4,632 in the same month.
This means that, simply by shopping around with their pensions savings, annuity purchasers could add £996 per year to their retirement income, enhancing their annual pension income by almost 20%.
