One in three UK adults fail to shop around when buying an annuity, says retirement specialist Just Group.
Analysis of the FCA’s Financial Lives Survey found that 35% of adults aged over 50 bought their annuity from the same provider they saved with and 33% of those who bought an annuity in the last four years did not compare rates between different providers.
Just Group said so-called ‘zombie buyers’ could be missing out on more than £400 a year by not shopping around for the best rate available. Not only have the rates on offer from annuities risen in recent years, but the gap between the best and worst-paying annuities has also widened.
Furthermore, pension savers could be missing out on benefitting from a personalised rate, taking into account health and lifestyle factors, which could give a higher income. Nearly three quarters (74%) of adults aged 50-69 planning to access their defined contribution pension in the next two years did not know that certain health conditions could increase their annuity income, according to the FCA.
Stephen Lowe, group communications director at Just Group, said: “Higher rates on guaranteed income for life products have increased customer interest but there are still too many ‘zombie buyers’ who are not shopping around to get the best annuity deals available.
“Over the course of an entire retirement, a saver failing to shop around could be missing out on thousands of pounds of extra income, the closest thing in the financial world to being given ‘free money.’
“Anyone considering purchasing an annuity should shop around the open market and ensure they disclose information on health and lifestyle factors to make sure they get a personalised rate, all of which will help them secure the best rate on offer to them.”
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