Answered by Michael Englefield
Annuity Rates for Smokers
Actually, as a smoker you’ll be able to achieve a higher annuity rate than a non-smoker. This means you’ll receive a larger regular income from your pension savings than someone who doesn’t smoke but has a pension pot of exactly the same size.
Smokers qualify for what’s known as an ‘enhanced annuity‘, a retirement pension paid to someone who is in poor health or smokes.
Due to the life-limiting implications of smoking, the annuity company foresees having to pay an income for a reduced number of years and so increases the amount you receive accordingly.
A single man aged 65 living in the same postcode as Drewberry’s London office can expect to receive an annuity of £2,690.64 per month from a £50,000 pension pot. This assumes he doesn’t index his annuity so it keeps pace with inflation.
As a smoker, however, the same man could expect to receive another £125.40, or £2,816.04 per year.
If you’re currently suffering from a smoking related disease, such as chronic obstructive pulmonary disease (COPD) or heart disease, then your annuity rate could be further enhanced once these factors are taken into account. Any enhancement due to ill health would be on top of the enhanced annuity rate for smokers you receive.
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