If you're at an age where you're soon to be retiring make sure to check that any pension policies that were taken out between the mid 1960s to the late 80s have GARs or Guaranteed Annuity Rights attached to them. Having a GAR can mean a 40%+ boost in income over annuity rates available in today's market.
It pays to do your own research into this matter and possibly rely as well on a good financial advisor because unsurprisingly some insurers prefer not to let their clients know of this bonus. (How To Find The Right Financial Adviser)
The reason that many pension policies were sold with GARs attached is that most insurance companies thought it highly unlikely that annuity rates would fall as low as they are today, this therefore explains why some insurers prefer not to notify their clients of their existence.
What To Do If You Think Your Policy May Have a GAR Attached?
- Check the original policy to see if it includes a table giving annuity rates at different ages, if yes then it's excellent news because a GAR is attached
- Note, some GARs are referred to as Guaranteed Mortality Rates
- If you haven't got any paperwork, don't panic just write to the insurer and ask if you qualify for a GAR
- If you cannot trace the company in question call the FSA's (website) helpline 0845 606 1234
- GARs can be a maze so excellent advice is to get hold of a financial advisor to help, but first make sure he or she understands the market and product
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