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Retirees suffer ‘torpor tax’ by failing to shop around for guaranteed income

Retirement

Accepting your own pension provider’s offer rather than actively seeking the best rate available to you is like being taxed extra by your provider for assuming they are offering a competitive deal, according to new warnings from retirement specialist Just Group in the attached press release.

Analysis shows that in the last two years the difference between the best and worst rates was up to 15% at times. On a £50,000 pension that would be £206 a month income instead of £180, equal to £7,800 extra income over 25 years.

Fully disclosing medical history plus personal information such as weight and alcohol consumption can also make a big difference through ‘personalised’ rates.

Stephen Lowe, group communications director at Just Group, said:The difference between the best and worst providers can be up to 15% a year extra income and the two-thirds of retirees likely to be eligible for extra due to medical conditions or lifestyle factors could enhance that further. Not shopping around for that extra income – cash that will be paid every month for as long as you live – is like accepting a ‘torpor tax’ that should enrage people who are losing out.”

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