Interview with a retirement expert - transcript

Ruth Richards

I asked pensions expert Tom McPhail to shed some light on some of the ways retirees in Britain today can get the best incomes at retirement.

Q: Tom, first things first: what do most people do with their pension savings when they retire?

A: While there's greater choice nowadays around 95% of people opt for the security of an annuity.

With an annuity you pass your pension savings to an insurance company in return for an agreed amount of taxable income every year to be paid for the rest of your life.


The big draw of an annuity is that your income is secure, it can't be affected by stock market changes and it won't run out. For most people this is an attractive proposition which helps you enjoy retirement worry free.



Free annuity quote: visit our online calculator now
Investors who can afford to take more risk with their retirement income with the aim of a higher return could also consider a more flexible option, income drawdown.

Q: I've decided an annuity is the right option for me and my pension company have written to me telling me how much income they will pay if I buy my annuity with them – is this likely to be the best deal?

A: No, accepting the first annuity rate you're offered could be a big mistake, and cost you up to 40% of your annuity income. 

The best tip I can give you is to shop around. Once set up, an annuity cannot normally be changed or cancelled, so it's important to consider all your options at the outset and make sure you get the best possible income.


To get the best income I suggest you compare quotes from the top providers – you'll find they often offer significantly different income for the same pension pot.
Our free annuity calculator can make this process quick and hassle free.


Shop around with our free annuity calculator
In addition, make sure you give as much information as possible, particularly about your health and lifestyle, when getting your quote. We helped our client's increase their annuity incomes by an average of £1,295 last month* - just by making sure they declared as much information as possible.
All sorts of factors could lead to a higher rate including:

• Your postcode which could increase your rate by up to a 10% difference.
• Your marital status as some providers offer a higher income to people who are single.
• And the more obvious factor: your age. The older you are the higher income you tend to receive.
• Also, certain health conditions and lifestyle factors could mean you're offered a higher income.

Shop around for enhanced annuities based on your health and lifestyle

Q: What lifestyle and health conditions could boost my retirement income?

A: Amazingly there are over 1,500 different conditions that could qualify you for an enhancement. These include common conditions such as high blood pressure and high cholesterol or historic conditions like cancer where you now have the all clear. Even your height and weight can affect your income so it is definitely worth checking before you apply.

Could you get 40% more income in retirement?

Compare enhanced annuity rates now

The most important information to provide is the name and dosage of any medication you're taking and any readings you have had taken by the doctor e.g. blood pressure reading. If you're not sure a quick call to your GP to check your records will be well worth it as it could increase your income by between 10 and 20%.

Q: What should I look for when comparing annuity quotes?

A: It's important to make sure you're comparing quotes on a like for like basis. Using an online comparison site can make this easy as you simply enter your details once and exactly the same quote is then obtained from all the providers for you to compare.

Free enhanced annuity quote: visit our online annuity calculator
Make sure the quote you are given is guaranteed. This means the rate is live and is actually what you will receive provided your pension fund is transferred to the annuity provider within the time limits (usually around 14-30 days). Some comparison sites only give you an estimate and the income you actually receive can be very different.


Try adding extras like an income for your spouse or an income that will increase in line with inflation. These will affect the income you can get but can be valuable additions depending on your circumstances.


The Hargreaves Lansdown annuity calculator lets you compare guaranteed quotes from ten of the top annuity companies. The service is free and without any obligation. If you do decide to go ahead with any of the quotes we will do all the work to set up your annuity. Our administration is covered by a commission which has already been taken into consideration in the online quotes you compare, so you can be certain no additional charges will be added later