Annuitisation delays 'hurts pensioner income'

Pension savers could be risking losses of up to £1,400 when they turn their pension pot into retirement income because of annuitisation delays, Virgin Money research suggests.

Despite industry initiatives to speed up the process, there are still poor performers, the financial services firm says.

The worst offenders are delaying transfer times by as much as 51 days or 10 working weeks, according to calculations by Virgin Money.

At the best rates for a 65-year-old, this wait comes at a cost of almost £1,400 for a man and £1,290 for a woman.

Every week's delay costs a man £138 a week in income and £129 for a woman.

Virgin Money warns slow transfer times are a "genuine threat" to a pensioner's payout, particularly when the risk from delays is compounded by the risk of rates dropping.

It says income on a £100,000 fund has fallen by about 8% in the last six months.

This is equivalent to about £600 a year.

The Association of British Insurers has been urging annuity providers to cut waiting times to a 30-day target.

Virgin Money says it has responded by pledging to send out maturity forms to its pension customers within five working days when they request a transfer form and to send a cheque to the annuity provider within a day once the customer returns the forms.

"Buying an annuity is a one-off decision and one which retired people have to literally live with," Virgin Money's Scott Mowbray says.

"With a fixed annuity the income you receive is fixed for life so the losses from delays are also fixed for life. There's no second chance," he adds.