More than half of over-55s planning to purchase an annuity said they would not shop around as they trust the provider they are with, according to research from Canada Life.
The retirement specialist said 54% of individuals aged over 55 trust their current company, while a further 30% say they have a good relationship with their provider and 22% say they provide good customer service.
Nearly one in six (14%) admitted they wouldn’t consider switching provider as they wouldn’t know where to start, while 12% also thought it would be too complex. Other reasons for not switching included concerns that it would take too long and delay access to income (9%) and believing it can only be done through seeking regulated advice (7%).
Nick Flynn, director of retirement income at Canada Life, said: “Data recently published by the FCA shows that many people are not shopping around when choosing their annuity and that suggests the ‘information prompts’ introduced in March 2018 have had little effect.
“Around one in ten people who plan to buy an annuity when they retire will simply buy direct from their current pension provider, irrespective of the income they are offered. This approach is unlikely to provide them with the best deal or the best type of annuity for their individual circumstances and will lock them out of extra income that could be available. As an industry it is up to us to do more to ensure customers do not get a poor deal.
“Buying an annuity is a significant financial step and an adviser or annuity broker will always be best placed to help you understand the choices available.”
Canada Life recently published data which showed the ‘tipping point’ of additional income at which someone would choose to move pension provider is £500 a year.
