Posted by Flora Maudsley-Barton | December 20, 2008
Getting more (pension) for the rest of your life
Here’s an example of why you should not take the first offer when you draw your pension.
Names have been changed to protect the innocent.
Mr A decided to draw his pension. He’d saved up over the years and ended up with two separate pension policies. One was worth £40,000, the other £20,000 (let’s say).
From that £60,000, he wanted his lump sum of £15,000, leaving £45,000 to buy an income for the rest of his life.
By the time he asked for my help, the pension providers had offered him £206 per month for life.
Luckily for Mr A, he didn’t take that offer.
He gave the £45,000 to a different company instead. It made sense to choose the company that will pay the highest income, instead of just using the same company he’s saved with.
We got him £241 per month instead.
It pays to shop around.
These figures were compiled in December 2008 and will drift over time. But you get the point?