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Why do people waste £1bn a year at retirement
The annuity market is a multi-billion market these days and the Pensions Institute of the National Association of Pension Funds estimates that approximately £1 billion is wasted per year by pension scheme members thanks to poor decision making. Commissioned in March 2012, the research surveyed around 250 pensioners who had retired in the last 6 months and found the following reasons for the wastage of this staggering sum.
Failure to move money for fear of loss
The single biggest reason why pensioners do not move their money post retirement is because they feel that moving away from their current provider would be costly. Most people researched also feared that new advisors won’t be interested in them or that getting help from experts would cost more money.
Retirement is a profound time in a person’s life. Most retirees don’t have a plan in place for the sum that they are about to receive at retirement. Others are hounded with so much advice that they are just plain confused and they end up going with whatever feels the most familiar to them instead of making an informed choice.
Not being prepared to deal with hassle
Getting information about pension rights is made as humanly difficult by pension funds and insurers as they can to put people off moving their funds. For a pensioner who has just ended their career, the stress of dealing with insurers who can be very reluctant to provide any information about pensioners rights. These insurers often do not respond to correspondence or queries related to pension funds or respond using such arcane language that the average pensioner feels flustered and confused. Since pensioners are not prepared to deal with such hassle, they end up losing a lot of money.