The new coalition Government is removing the requirement to use at least three quarters of your pension fund to buy an annuity at age 75 and that could have a profound effect on your retirement.

The income you can generate from annuities has fallen dramatically in the last decade, and you can now expect to get just over 5% a year from your fund. On a £30,000 fund that is just over £1,500 a year – not a lot to show for years of saving. Which is why this is such good news, but you should speak to a pension adviser to make sure you do not make the wrong choice when you are considering your alternatives.

There is going to be an emergency budget – that much we know – but what it will include is less certain. For sure, the country’s deficit needs reducing, and that means tax rises and the removal of some tax breaks.

So now would be a good time to maximise pension contributions if you are a higher rate taxpayer. Right now, you will get 40% tax relief on your pension contributions. On an average pension contribution per month of £150, you would need to pay in £107 of your own money and the remainder would be added by the Government in tax relief. Over a year, this would save you £516 for your pension pot.

If this benefit was removed, you would have to pay £125 to put £150 into your pension, the same as basic rate taxpayers. Speak to a pension specialist now to maximise your tax relief before any changes can be made. Over a year, this would give you £300 in tax relief. So by losing your extra relief, you would cost yourself an extra £216 a year.

But HSBC is launching its global Advance account in the UK, so how do the two match up?

Which Account Offers What?

Santander adding Green Flag to its stable means all the account’s benefits now add up to £460 a year. It already offers family travel insurance including winter sports cover and a 6 per cent interest rate.

There is identity protection which gives you up to £50,000 of legal cover, card loss assistance, key protection with up to £500 for replacement keys or locks, and commission-free travel money. You also get a £100 interest-free overdraft, and you pay 12.9 per cent on agreed overdrafts after that.

HSBC Advance has a very different portfolio of benefits on offer, which it claims is worth more than £500.

It offers customers preferential terms on selected HSBC mortgages, overdraft and savings. You can also get a regular savings account paying 8 per cent fixed for 12 months.

UK breakdown assistance is included, and you can upgrade to Homestart if you wish, plus family travel insurance, fee-free cash machine access abroad, and a 12-month fixed rate Isa paying 2.85 per cent.

The real benefit of this account comes if you travel extensively, or intend to move abroad either temporarily or permanently. You have global customer recognition – so anywhere in the world you will be treated as a ‘local’ customer – and you can access emergency cash if you need it.

One of the biggest benefits is international assistance to open accounts – this is a huge advantage if you are moving abroad, as it can be very hard to open an account overseas.

The final benefits are:

• A discounted overdraft rate of 17.9 per cent EAR (typical) compared to the bank’s standard rate of 19.9 per cent,
• £3,000 of life insurance cover and 50 per cent discount on LifeChoices premiums
• 10 per cent cash back on personal loan interest costs,
• identity theft assistance and advice

For the first three months you would pay £6 for the privilege of having all this, but that will rise to £12.95 a month after that.

Which One Is The Winner?

So which of these accounts delivers the knock-out punch?

Santander is impossible to beat on the interest rate at 6 per cent, and it has a much cheaper overdraft than HSBC’s Advance. It does offer commission-free travel money, but that promise is only worthwhile if the rates on offer are decent in the first place. Often you can get a better deal on travel money online rather than at the bank.

HSBC has the fee-free cash machine access abroad, which is a real benefit, and has an element of life cover on offer, but it is pretty poor at £3,000.

The Final Verdict

But with a much higher overdraft rate, and access to a tracker rate of 2.49 per cent – which can be matched by Mansfield Building Society, the only real benefit for this account we can see is if you are looking to move abroad.

If that is not the case, then we would give Santander the verdict.

So clearly, peace of mind is worth paying for – but you need to make sure you are not paying more than you need to for the cover.

The team at Totally Money have done their bit, by negotiating an exclusive £50 cashback deal with its broker network.

But there are plenty of other things you can do to save money on healthcare.

1. Keep healthy to reduce your premiums

Premiums have gone up dramatically in the last 10 years, thanks to medical advances, and they will increase with age. But smoking or drinking heavily will also help to push your premiums up.

2. Use a broker

Brokers are the best way to search the whole market for a deal. If you ask, many will also reduce their commission to give you a bigger discount.

Health insurance is notoriously difficult to buy and make sure you have the right cover for you. Many companies will exclude pre-existing conditions, and the broker is particularly helpful if you are in this position, and you have a pre-existing condition you would like to eventually be considered in the policy.

The other reason to use a broker is to get expert advice – the policy is only as good as the claims experience, and when you are ill, you do not want to find out that is left wanting.

3. Check whether your employer offers cover

If your employer offers cover as part of your employment package, take it. It will usually be cheaper, and usually has ‘moratorium underwriting’ so you do not need to declare any pre-existing conditions because the insurer expects to ‘win some, lose some’ across the whole company’s cover. Check that this is the case though with your company’s human resources department.

Also, check your tax position, as it could be considered a ‘benefit in kind’.

4. Pay as much as you can yourself

Go for the highest excess you can afford – if you can cover the first £5,000 of any claim, for example, then you will have cut your premiums to a minimum. It would mean that for many minor operations, you would face paying for the whole treatment yourself.

5. Get a joint or family policy

If you need to cover your entire family, then there are policies to cover you all for a single premium.

6. Shop around

Check a variety of policies before you buy one, and use a broker if you want someone else to do the legwork. Getting a broker to compare policies is wise, as the small print in each can easily trip you up.

7. Get a policy that covers where the NHS fails

Some policies will offer cover to dovetail where the NHS is unable to deal with a condition within a period of time, usually six weeks. These can be cheaper, but be sure you are prepared to wait if you need medical help.

8. Consider paying annually rather than monthly

If you can afford it, paying your full annual premium in one go can get you a discount on the cost. Your broker should be able to help suggest the companies that will be most effective for this strategy.

9. Budget cover

Many companies still offer these policies – BUPA, Aviva, Bright Grey – but they are no longer marketed as ‘budget’ policies. Instead, these companies will now offer you a ‘menu’ of cover that starts at the lowest level.

If you want to just have cover that will ensure you get in-patient treatment at a private hospital, with any diagnostic tests done on the NHS, then you would simply get the lowest – or core – cover. Taking this will reduce your premiums by as much as 70 per cent, and will ensure you get a private room and decent hospital food if the worst should happen.

This is ideal if you are young and healthy, but if you are older and have pre-existing conditions, it is probably not a great idea. A broker will help you decide.

10. Always read the small print

You must read the small print to be sure what you need is covered. The best way to do this is to buy through a broker rather than direct – we always recommend this, which is why Totally Money uses the broker model.

Most policies will exclude chronic conditions. For example, you will not be able to claim for chronic conditions such as asthma and Multiple Sclerosis, and most companies exclude conditions you have suffered from in the last five years.