Medical assessments to set retirement income

PEOPLE approaching retirement should prepare to have all aspects of their medical history analysed when they purchase an annuity, a top insurance company boss has told City A.M.

“You can’t stop the march of science,” said Clive Bannister, chief executive of FTSE 250 life assurance consolidation firm Phoenix Group. “Annuities have typically been priced on three criteria: postcode, profession and smoking. But there is going to be a plethora of medical data from assessors that will allow you to make precise pricing.”

Savers who have built up cash lump sums or private pensions can choose to trade this pot for a guaranteed monthly stipend as they enter retirement. But the amount they receive varies according to each annuity provider’s assessment of the customer’s likely life expectancy.

“I have no doubt that over the passage of time we will have more and more bespoke pricing,” Bannister said. “More people are retiring and we have to make our money last as long as we live.”

Last week the Association of British Insurers published typical annuity rates from its members in an attempt to bring transparency to the market. For the first time it revealed wildly different rates offered to identical customers.

It shows that a 65-year-old non-smoker from Wimbledon with an £18,000 lump sum can expect to receive anything between £839 and £1,099 a year for life. Phoenix would offer £910.