Annuitants run the danger of losing thousands in retirement income by failing to compare options.
The highest and lowest incomes offered on the market have significant variances, according to data from Hargreaves Lansdown’s annuity search engine.
The highest paying annuity might provide £6,741.72 in annual income to a 65-year-old who is in good health. Compared to the lowest paying product, this costs nearly £800 more year.
People might get a lot more when the quote includes their medical history. A person who has had a stroke may be able to negotiate a yearly benefit of up to £8,329.32.
This is about £2,500 per year more than the lowest paying annuity and over £1,500 more than the best one for someone without health issues.
Conditions such as high blood pressure, high cholesterol, diabetes and smoking can also qualify you for higher annuity incomes.
Hargreaves Lansdown head of retirement analysis Helen Morrissey says: “It’s well-known shopping around can save you money but when it comes to annuities it really pays. By looking across the market and including as much information about your health and lifestyle as possible, you stand to be better off by hundreds, if not thousands, of pounds per year.
“We’ve looked at data from HL’s annuity broking tool, which looks across the whole annuity market to find the best rates, and the differences are truly startling. Even if you have no health conditions, a 65-year-old could find themselves over £800 better off per year by choosing the best annuity rate offered compared to the worst. It shows the importance of not just accepting the quote offered by your provider – there’s a chance you could get a lot more money by shopping around.
If you include information on your health conditions, then you could get more again. It may feel counterintuitive to get a higher income for having health concerns but in the case of annuities where your longevity is a key factor then it is vital to include as much information as possible.
At the time the search was run the current top rate for someone who had had a stroke is £8,329.32 – the lowest paying annuity for someone with the same health profile is almost £1,000 less. If you compare it to the lowest paying annuity for someone with no health conditions, then your income is close to £2,500 higher per year.
Over the course of your retirement, you could be tens of thousands of pounds better off so it is vital that you shop around and include as much information as possible about your health.”