People with diabetes are missing out on higher pension income by failing to shop around for products that take health conditions into account.
Ahead of World Diabetes Day later this week, one business that specialises in retirement income has produced stats that suggest a 65-year-old with Type 2 diabetes could be better off by more than £200 a year simply by opting for a so-called enhanced annuity.
An annuity is something retirees buy with their pension pots to give them a monthly income for life. An enhanced annuity gives the recipient a higher monthly payment because – to put it bluntly – the less fit someone is, the shorter his or her life-expectancy is. This means that annuity providers think they will have to make the monthly payments for a shorter time, so they can offer a higher monthly sum in the meantime.
One person in every 10 who retires is thought to have Type 2 diabetes, meaning that older people could collectively be tens of millions of pounds worse off each year than they should be. Add in the various other illnesses and conditions that qualify for enhanced annuities, and that figure can be multiplied again.
“Living with diabetes is difficult enough, without losing out on income in retirement,” said Andrew Tully, pensions technical director at MGM Advantage, which published the data.
“Unfortunately, we know that the majority of people who retire each year do not shop around for the best product to provide their retirement income. By doing their research and getting professional advice, those living with diabetes could increase their retirement income substantially.”
MGM Advantage said it provided enhanced annuities last month for clients with a range of conditions and habits, including high blood pressure, asthma and high cholesterol. Smokers also qualify for enhanced annuities because they are statistically likely to die sooner than non-smokers.