Advisers must heed the difference an annuity rate could make to clients’ circumstances as the pension changes approach, Partnership’s head of business development has warned.
Martin Lines argued that consumers and their advisers should treat annuities like insurance, in assessing how much they needed and what the best rate would be.
And he claimed that though underwriting could lead to worse rates for insurance, it could improve the rates available on annuities.
He said: “Underwriting improves the rate a client can get, thus reducing the amount that needs to be spent on this type of insurance.”
Mr Lines noted that, with pension flexibilities coming into force in April, spending less on guaranteed income could leave a greater amount available for investment.
Partnership research carried out among 2006 people aged between 45 and 70 in April 2014 found that 20 per cent thought a fund should be completely withdrawn as cash.
But 64 per cent of respondents said that they would look for a guaranteed income from a product under the new pension rules.
Mr Lines added: “By combining annuities with drawdown, it is possible to meet the level of income needed and have flexibility.
“In fact, structuring a blended solution in this way has key advantages.”
