The sale of annuities jumped by nearly 39% in 2023/24 but four in 10 (41%) retirees are buying from their existing pension provider, raising concerns many may be choosing convenience over value, said Just Retirement.
The retirement specialist warned that failing to shop around could easily lose pension savers thousands of pounds.
According to its calculations, a healthy 75 year old can secure 20% more income from the best annuity provider compared to the worst. The best-worst gap is 18% at age 70 and 13% at age 65 and the income offered could be higher once medical history and lifestyle factors are disclosed.
Stephen Lowe, group communications director at Just Group, said: “The gap between the best and worst deals has been rising through this year. Annuities provide secure income, giving people peace of mind to spend what they receive without worrying if it will rise, fall or run dry during their lifetime. But there are no second chances when you buy an annuity, you must get it right first time.
“That means disclosing health and lifestyle information that could push the rate higher then shopping around to find the most competitive deal. The better the deal, the more lifetime income you get.”
Lowe said with a competitive market, it is unlikely that retirees’ own pension provider will offer the top rate and settling for a lower amount initially will over time “multiply into significant sums of lost income.”
