New rules have been announced aimed at helping pension savers make the most of their pensions, but putting on a brave face could be costly for retirees seeking to turn their pensions into guaranteed lifetime income, Just Group has warned.

The retirement specialist said the new rules should encourage retirees to fully disclose their health and lifestyle information, which could enable them to secure higher incomes.

While retirees seeking a secure lifetime income must already be shown the difference between their own provider’s rate and the best rate in the market, it is only from today that providers will be obliged to ask about health and lifestyle – to use that information for generating a market-leading quote.

FCA research has found that 39%-48% of pension savers buying a guaranteed income for life from their own pension provider may have been eligible for higher rates elsewhere due to health history, or lifestyle factors.

Group communications director at Just Group, Stephen Lowe, commented: “People seeking secure retirement income should be prepared to answer questions about their health and lifestyle, or it could be costly.

“The rules oblige financial firms to ask health and lifestyle questions in order to help shop around for the optimum product.

“They have until 1 January to comply, but frankly, retirees need to avoid firms that are delaying because they are not doing their job properly.”

Just Group said that all pension savers considering to take income from their pensions, or reviewing the income they are currently taking from pensions, should fully disclose information about their health.

“Having an accurate idea of how much guaranteed income for life you can generate from a pension provides a good baseline for all other non-guaranteed options to be considered,” Lowe added.

He also stated that nearly 75,000 guaranteed income for life plans were sold in the 12 months prior to March 2019.

Thirty-eight per cent of them offered ‘enhanced’ rates, due to health or lifestyle factors, but that is below the two-thirds that Just Group’s research has revealed could be eligible.

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