Consumer rights: What can I do about a low retirement forecast?

Work pension schemes can sometimes offer a lower-than-usual quote, but you don't have to accept it...flood damage causes row with insurers
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The Independent Online

I'm retiring from my job at Christmas when I turn 60. I've been paying into the employer's pension scheme.

With my own and the employer's contributions there's £42,000 to pay for an annuity after I've taken my tax-free lump sum. I had hoped that would add a reasonable amount to my state pension but I have been offered £1,200 a year. That seems very little to me and I'll probably have to go on doing some work just to cover my bills. A friend says he's been offered much more even though he has a similar amount saved up. Is there anything I can do to get a better deal?



Would I be right in thinking that you have been given this quote by the pension provider running your employer's scheme? You used to have to buy your annuity from that pension provider but no longer. You can shop around and may well get a better deal. Pension schemes must offer members an open-market option so that they can use their accrued pension pot to look for a better income than that offered by the pension company itself. There's no penalty to pay. You should have had all the necessary information almost six months ago.

If you haven't bought your annuity it isn't too late; shop around as many firms as you can and see what they come up with. Andrew Wilkins, senior consultant and pensions specialist at Philip T English, says: "The rate offered does look poor and you need independent financial advice. Please don't attempt this alone. The adviser will be paid by standard brokerage which actually costs you nothing. If you have any health issues this also needs to be accounted for."

When Mr Wilkins says health issues need to be accounted for he means you might get a better deal because of certain medical conditions such as diabetes, or alternatively if you smoke. Don't be disappointed though if you don't come out with quite as good a figure as your friend. If he's slightly older the expectation would be that he'd have fewer years of income and so the annual amount could be a bit higher. Life expectancy for men is still slightly lower than for women and that can make a difference too.

From the way you've written your query it sounds as if you're single, but if you have a spouse you might want to look at an annuity which will leave them something if you die. Ask friends for recommendations of good independent financial advisers; Citizens Advice Bureau will be able to give you a few contacts.

Earlier this year, our house was badly damaged by flooding and I've been having trouble with the insurer. The buildings insurance was fine and the walls have been dried out and re-plastered and painted. The work has all been paid for by the insurance company and we're finally ready to move back in. But the contents were covered by a different firm and they're refusing to pay the whole of our claim. As well as carpets and furniture we lost electrical items such as the TV and computers. But even though we'd paid for new-for-old cover they're willing to pay only two-thirds of our claim. Is there anything I can do to get the amount increased? We're losing more business the longer this goes on as we work from home.



Did the insurance company know that you run your business from home? If you didn't tell them when you applied for the insurance cover, or when you started to work from home, that could be the reason they're not paying out your full claim. It works like this: if you didn't cover your property for enough in terms of the value of the contents, you won't be able to claim the full value. If your contents are worth £20,000 but you've insured for only £10,000, then you'll get only half of your claim. If there are things that you don't tell the insurer, then it's likely to reduce the amount it will pay out. Working from home and taking in a lodger would fall into that category.

Ask your insurer for their reasons for reducing the amount they're paying and try to negotiate. If your insurer was aware of your business and your contents were fully covered, read your policy for any clauses that limit the amounts that will be paid. Your insurer may be offering enough for new replacements but not to the quality you're claiming for. Go back with as much supporting paperwork as possible such as receipts or valuations. If you had antique furniture it can be difficult to come to an agreement as to how much a replacement will cost without information and estimates from experts. If you used a broker to find your policy, enlist his or her help.

Do you have a consumer complaint?

Write to Julian Knight at The Independent on Sunday, 2 Derry Street, London W8 5HF

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