The gap between the best and worst-paying annuities has grown recently, in line with rising bond yields, says retirement specialist Just Group.
According to research, a 70-year-old could earn nearly 20 per cent more income by choosing the best deal over the worst, which could mean an extra £7,400 every 10 years from a £50k pension. For a 65-year-old, the gap is 13 per cent, adding £4,380 over 10 years.
Just Group says the gap has been widening over the past year and recently reached its peak, highlighting the importance of shopping around for the best annuity, especially for older buyers, to increase retirement income.
Just Group group communications director Stephen Lowe says that Guaranteed Income for Life (GIfL) solutions providers were likely responding to market rate changes.
He says: “GIfL pricing is influenced by the returns on gilts and bonds which have been moving up recently. It’s a competitive market and annuity providers will be watching the changes, with some responding more quickly than others depending on commercial considerations.
“Current annuity rates are attracting a lot of interest from retirees wanting guaranteed income but it is unlikely your own provider will pay the most. Avoiding inferior rates requires disclosing health and lifestyle information that could push the rate higher and then shopping around for the best deal.”
