Enhanced annuities can make a significant difference to retirees income and not just in the year of retirement but over the whole of the retirement years.
The latest MGM Advantage Annuity Index1 shows that over the course of an average retirement, there is approximately a £13,000 difference in income received from an average conventional annuity compared to an average enhanced annuity.
| £50,000 pension pot | Average standard annuity
(per year) |
Average enhanced annuity
(per year) |
Percentage difference | Difference over the first 5 years of retirement | Difference over average retirement |
| Men | £3,173.78 | £3,938.48 | 24.09% | £3,823.50 | £12,999.90 |
| Women | £3,003.79 | £3,685.32 | 22.69% | £3,407.65 | £13,630.60 |
Source: MGM Advantage
What are enhanced annuities
Enhanced annuities are those that are paid to retirees that have shorter than average life expectancy and therefore will receive the income from their annuity for a shorter period. The number of qualifying conditions is over 1500 and they can be used on their own or in combination. For example, a smoker would qualify for enhanced annuities on its own, but in combination with say high blood pressure or high cholesterol then the combination would give significantly enhanced rates.
Before you exchange your pension pot for any annuity you should check to see if you qualify for enhanced rates, many people can qualify for enhanced annuities by their BMI or height and weight, even excess alcohol consumption can qualify in some cases.
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