The least competitive annuity deals are paying old buyers less than those five years younger, new analysis by Just Group has revealed.
Although annuities typically pay older retirees more than younger retirees due to them having fewer years of life remaining, the analysis found that in some cases, the opposite is true.
A 70-year-old with a £50,000 pension fund would receive £3,560 a year from the least competitive deal, which is £71 a year less than the current best deal on offer to a 65-year-old. The worst deal for a 75-year-old is £4,024, which is £39 a year less than the best deal for a 70-year-old.
Just Group said the findings highlight the importance of shopping around.
“Our research reinforces the importance of retirees shopping around for the best rate when buying a guaranteed income for life,” said Stephen Lowe, group communications director at Just Group.
“You may have saved with your current pension provider for years but that is no guarantee that they will offer you a competitive rate. In some cases, retirees are being offered rates that deliver less income than people five years younger can secure.
“Annuities give people peace of mind to spend what they receive without worrying it will run out during their lifetime. But you have to get the choice right first time; finding the deal that will deliver the best income. That means shopping around and disclosing health and lifestyle information that could push up the rate,” Lowe added.
