Option for those forced to retire through ill health
Those who qualify for enhanced annuities can boost their retirement income by as much as 40% if they shop around, according to Partnership.
The firm is supporting a report published by the Pension Policy Institute (PPI) today on retirement income and assets, which looks at the implications of the government’s plans to raise the state pension age.
The report states that 30% of 60 to 64 year olds suffer from a disability that limits their ability to work, or which forces them to leave work altogether. It says that rises to the state pension age and changes to the benefit system could mean that those who have not planned sufficiently for their retirement may suffer even more financially as a result.
According to the PPI, someone who leaves work at age 60 due to ill health will be £60 short of his or her replacement rate – that needed to achieve a similar standard of living to the one they had in working life – while someone who works until 67 would be just £30 short in comparison.
The PPI analysis showed that purchasing an enhanced annuity could increase income for those in retirement with health problems by an average of 19%, or £3 per week.
Partnership says its own research shows that some people who qualify for enhancements for health or lifestyle reasons can increase their retirement income by as much as 40% if they shop around.
Steve Groves, chief executive officer of Partnership said the report highlights the bleak options facing those who are forced to retire through ill health before reaching the state pension age.
He said: "Many people who have failed to save adequately for their retirement will be unlikely to meet the replacement rate necessary to avoid financial hardship in retirement.
"There is, however, some good news. The 40% of people who are eligible for an enhanced annuity for reasons of health and lifestyle can increase their retirement income by up to 40% by shopping around for a better annuity. This is an important source of income which people at retirement can no longer chose to ignore."