Retirees choosing to buy annuities later in life are most at risk of missing out on extra lifetime income by failing to shop around, new analysis of market data by retirement specialist Just Group shows.
A healthy 75-year-old can currently secure about 16% more income from the best provider compared to the worst. The gap is narrower at age 70 (15%) and at age 65 (13%).
In cash terms, this means a healthy 75-year-old buying an annuity with a £50,000 pension could expect about £4,720 income each year for the rest of their life from the most competitive provider compared to £4,070 from the least competitive, a difference of £650 (16%) every year. The best-worst difference is £500 a year at age 70 and £400 at age 65.
Stephen Lowe, group communications director at Just Group, commented: “Better rates are pushing up interest in annuities but buyers must still do their homework in order to avoid the worst providers and secure the highest possible guaranteed income for life.
“It’s quite shocking that the FCA found half of annuity buyers did not compare rates to find the best provider – it’s the closest thing in the financial world to being given ‘free money’ and it raises concerns about the level of support retirees are receiving.”