Approaching retirement? Why you shouldn't go for the easy option

So, imagine you're approaching retirement and wondering what to do with your money purchase pension scheme.  You receive a pack highlighting the fact that you have the opportunity to either take the annuity (where you convert your pension pot into an income) offer from your existing provider or shop around for the most preferential deal.

Whilst there are now alternative options to buying an annuity most people still opt to buy an annual income on all or the majority of their pension fund.  For someone who wanted to take this option the easy route would be to sign the form within the pack and take one of the income options available through your existing provider....right?  Well it may be the easy route, but how much you could be losing out by taking the easy route and not shopping around?

Well, according to this Article from the Telegraph published last year UK pensioners lose 3.3 billion pounds a year (based on research from the Oxford Economics and PICA) by going for the easy option instead of shopping around for the best possible income they can receive from their pension fund.

The potential additional amount you may receive at retirement by shopping around for the best income depends on a number of factors, however it's always worth consulting your independent financial adviser to help you with this or alternatively, if you prefer to conduct some initial research, the Money Advice Service provide a useful annuity comparison tool to provide indications of how much you potentially may receive.

One important factor many people approaching retirement don't consider is how if that individual has poor health, are overweight, or are smokers may potentially increase the income they receive in retirement due to these factors.  For individuals who fall within these categories, it's even more important to ensure that they shop around for the most appropriate arrangement.

It's also important for someone approaching retirement to understand what the options are available when selecting the best income and consider whether you want Fixed or Increasing retirement income or a guaranteed period.

So, when it comes to selecting the most appropriate income at retirement....ensure that you take that time to select the best income possible.  The income you choose is likely to be with you for the remainder of your life....why not make it the most attractive it can be!