Labelled a ‘ticking time bomb’ by leading pensions campaigner Dr Ros Altmann, the shocking revelation could leave thousands of widows in financial difficulty in retirement.
Of the two types of annuity available, a single life annuity will normally end when the person who owns it dies. A joint life annuity may pay a lower monthly amount, but will guarantee a widow a pension for the rest of her life. However, in many cases, male savers would not have been aware that a choice was available because they failed to seek independent advice.
Other Means of Funding Retirement need to be Explored
£10.8billion was invested in annuities in 2009 which, experts say, could mean widows in their hundreds of thousands could be forced to fall back on the state pension or benefits. But will this be enough for a comfortable life in retirement? Dr Altmann has dubbed the consequences ‘potentially disastrous’ and Geoff Charles, Managing Director of Equity Release Specialists Bower Retirement Services (http://www.brsequity.co.uk), suggests that other means of funding retirement will need to be explored.
“Finding yourself unexpectedly without the retirement income you have become used to is a woeful experience and these issues surrounding taking the right advice on purchasing annuities clearly need to be addressed so that the situation is avoided.”
Releasing Cash from a Property could Enhance Retirement Income
“However, for a widow already in this situation and facing a retirement far removed from the one she expected, there is an option to explore should she own property. By releasing cash from that property, using for example a drawdown or income release facility via a lifetime mortgage, the widowed homeowner could enhance her income in retirement.”
Equity release may involve a lifetime mortgage or home reversion plan. To understand the features and risks, please ask for a personalised illustration.
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Bower Retirement Services is an FSA regulated independent financial advice company that offers specialist advice on equity release throughout the south of England. For more information e-mail firstname.lastname@example.org or call 0800 4118668. Bower Retirement Services offers a no obligation initial consultation to homeowners considering Equity Release. Visit http://www.brsequity.co.uk for further information.