Four out of 10 people buying annuities did so from their existing pension providers — suggesting many are failing to secure the highest potential income.
Data from the FCA shows that rise in annuity sales over the past year, due to better pricing, with around 1,500 sold a week over the past year.
However, analysis of current annuity deals by retirement specialist Just Group, shows that pension savers who fail to shop around are potential missing out on thousands of pounds a year in terms of retirement income.
Their data shows that it is those securing an annuity at an older age who face a much higher income gap, and are missing out the most.
Just Group’s data shows that a healthy 75-year-old can secure 20 per cent more income from the best annuity provider compared to the worst. The best-worst gap is 18 per cent at age 70 and 13 per cent at age 65. The income offered could be higher once medical history and lifestyle factors are disclosed.
Stephen Lowe, group communications director at Just Group, says: “The gap between the best and worst deals has been rising through this year. That is true for all ages we track but is currently particularly high at 20 per centfor buyers aged 75.
“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.”
