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Pensioners could lose out on hundreds of pounds for each month before their income begins, analysis from the firm has shown.
Hold-ups in transferring pension pots into annuities might cost some savers as much as £10,000, Virgin Money said today.
According to calculations from the firm, a 65-year-old man with a typical pension pot of £100,000 would lose around £645 a month due to the delays, which mainly come about through paperwork errors on the part of either the customer or the provider. Assuming a three-month delay, a 0.5 percent drop in annuity rates and a 20-year payout period, lifetime losses are pushed in to the five figures.
The Virgin Money analysis follows the release of new figures from regulator the Financial Services Authority (FSA), which showed that around six in ten annuitants faced some form of delay before receiving their first income from the products.
Virgin Money spokesman Scott Mowbray commented: "Buying an annuity is a one-off decision and one which retired people have to literally live with. 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. The financial services industry should be doing everything possible to make the transfer process as smooth as possible so customers receive the best possible payout. The risk of losing thousands of pounds for life is a genuine threat.
He added: "Pension providers have to improve their transfer times and the FSA is to be congratulated on its work although clearly more needs to be done."
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