27 January 2009
In a recent press release AEGON Scottish Equitable has drawn
attention to what they call the affordability gap in obtaining
annuity advice.
AEGON surveyed advisers who advise in annuity business. The
advisers were asked what they felt was a reasonable charge for
annuity related advice. The average cost of advice put forward by
these advisers was £733. With the average commission paid by
providers at around 1% of a pension pot this means that individuals
with a fund of less than £73,000 may struggle to get advice on
annuities.
Other points highlighted were:
- 85% of annuities purchased in 2007 were with pension pots less
than £40,000
- Maximum standard annuity commission rate from most providers is
only 1%
- The lower the pension pot, the more customers will need to pay
upfront for advice
The full press release can be found on AEGON's own webpage
here:
www.aegon.co.uk/media/press-releases/press-releases-2009/aegon-highlights-annuity-affordability-gap/index.html
The Pensions Advisory Service would urge individuals who cannot,
or are not willing, to pay for advice to consult both the FSA Guide
on Retirement Options (see our Publications section above) as well
as the FSA's own comparative table for annuities here:
www.fsa.gov.uk/tables
Individuals are also urged to call
our helpline for advice.
