Good news for retirees

Good news for retirees

The Bank of England disappointed mortgage holders this week, keeping the base rate at 5%. But anyone about to retire, and needing to turn a pension pot into an income for life, are finding the best annuity rates for years.

Nigel Callaghan at Hargreaves Lansdown says: "Rates are at a six-year high. They're 9% up on six months ago and 14% ahead of this time in 2006."

But the majority of those retiring are failing to get tip-top annuities. Too often, retirees simply accept the income offered by their pension provider without looking elsewhere - the so-called "open market option".

But this is set to change. This week the Association of British Insurers reacted to criticism that its members "hide" OMO in packs sent to people just ahead of retirement. It will now tell insurers to make sure customers are informed of their options.

Callaghan says: "There should be a clear statement that you will be poorer for the rest of your life - and maybe that of your partner as well - if you fail to consider the open market option."

For a guide on shopping around for the best annuity, go to moneymadeclear.com.

guardian.co.uk © Guardian Newspapers Limited 2008

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