- Home » Expat News » Single life annuities leave expat widows penniless
Single life annuities leave expat widows penniless
| Published: | 20 Nov at 6 PM |
Want to get involved?
Become a Featured Expat and take our interview.
Become a Local Expert and contribute articles.
Get in touch today!
Become a Local Expert and contribute articles.
Get in touch today!
For many expat retirees, the purchase of an annuity with their pension pot is seen as a practical way to guarantee a lifetime income, but being sold the wrong product can have disastrous consequences.
A shocking report from a former government advisor has revealed that insurance companies are pocketing the remaining balance of an annuity when holders die, leaving widows penniless. The blame, it seems, sits squarely with financial advisors who sell unsuitable products to retirees without explaining the complications and with the insurance companies themselves.
The problem affects former private sector employees whose defined contribution pension forces them to purchase an annuity on retirement. Pensioners on defined benefit schemes are not required to us their pension pot to buy an annuity, and former employers are committed to paying a widows’ pension worth 50 per cent or more of the value of the pension.
Expat financial advisors overseas are encouraging retirees to opt for single life annuities, which stop when the holder dies, often leaving widows with no other source of income. The remainder of the fund passes to the insurance company, with the annual total being pocketed standing at around £1 billion.
Pensions expert Dr Ros Altman is strongly critical of the annuity market, saying that because women typically outlive their male partners, the issue is nothing short of a betrayal of Britain’s widows. She adds that the majority of husbands are not receiving the right advice as regards which annuity is best, and are tempted by the higher monthly payments available from a single life annuity.
Few, she says, are checking what happens to their benefit when they die, and few are aware that the insurance company will refuse to release the remaining funds. Pensioners are not being given the right advice and few are familiar enough with financial terminology to make an informed decision.
A shocking report from a former government advisor has revealed that insurance companies are pocketing the remaining balance of an annuity when holders die, leaving widows penniless. The blame, it seems, sits squarely with financial advisors who sell unsuitable products to retirees without explaining the complications and with the insurance companies themselves.
The problem affects former private sector employees whose defined contribution pension forces them to purchase an annuity on retirement. Pensioners on defined benefit schemes are not required to us their pension pot to buy an annuity, and former employers are committed to paying a widows’ pension worth 50 per cent or more of the value of the pension.
Expat financial advisors overseas are encouraging retirees to opt for single life annuities, which stop when the holder dies, often leaving widows with no other source of income. The remainder of the fund passes to the insurance company, with the annual total being pocketed standing at around £1 billion.
Pensions expert Dr Ros Altman is strongly critical of the annuity market, saying that because women typically outlive their male partners, the issue is nothing short of a betrayal of Britain’s widows. She adds that the majority of husbands are not receiving the right advice as regards which annuity is best, and are tempted by the higher monthly payments available from a single life annuity.
Few, she says, are checking what happens to their benefit when they die, and few are aware that the insurance company will refuse to release the remaining funds. Pensioners are not being given the right advice and few are familiar enough with financial terminology to make an informed decision.
Comments » No published comments just yet for this article...
Feel free to have your say on this item. Go on... be the first!
