Retirees waiting until later life to buy an annuity risk missing out on thousands of pounds extra by failing to shop around for the best deal, according to Just Group.
The gap between the most and least competitive provider of Guaranteed Income for Life rises from about 10% at age 65 to nearly 18% by age 75.
Just Group’s analysis showed that a 65-year-old with a £50,000 pension pot would receive around £355 a year more income by choosing the best rate available over the worst. For a 75-year-old, this figure jumps to £717 a year.
The retirement specialist said its analysis of current rates found that the gap between the best and worst deals is much higher at age 75 than at age 70 or 65.
In cash terms, a healthy 75-year-old buying an annuity with a £50,000 pension pot could expect about £4,780 income each year for the rest of their life from a competitive provider compared to £4,063 from the least competitive. At age 70, the best-worst difference is £564, falling to £355 at age 65.
David Cooper, director at Just Group, said: “Shopping around for the best deal is important at all ages but becomes increasingly important for those buying later in life because of the huge gap between the best and worst rates available.
“Demand for Guaranteed Income for Life solutions has risen sharply for the last few years as annuity rates have improved, but only those comparing between providers and being prepared to switch will reap the full benefits.”
Cooper urged people to disclose health and lifestyle information so that the rate offered is personalised to their circumstances, before taking that information into the open market to see which providers are the most competitive.
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