AEGON Points to “Affordability Gap” in Annuity Advice
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 Ã‚Â£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 Ã‚Â£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 Ã‚Â£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:
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:
Individuals are also urged to call our helpline for advice.