One in two (50%) pension savers who bought annuities in the four years up to mid-2022 did not compare deals from different providers, the Financial Conduct Authority (FCA) has found.

The research by the regulator has also found that more than half (52%) of those taking part in the Financial Lives survey did not know that people with health conditions could be offered higher incomes.

Analysis by retirement specialist, Just Group, found that for a 65-year-old annuity buyer in good health, the best providers are currently offering about 14% more income than the worst, although the difference has recently been as wide as 18%.

This equates to £17,880 more income between the best and worst providers over a 20-year retirement, assuming an annuity bought for £100,000. This difference could be higher once health and lifestyle factors are taken into account.

Group communications director at Just Group, Stephen Lowe, said: “Improving income rates are pushing up annuity sales sharply but far too many of those buyers are missing out.

“Not shopping around is tantamount to refusing ‘free money’ that could add up to thousands of pounds over the course of a long retirement.

“Don’t accept your own pension provider’s offer because there are other companies likely to offer you more.

“You have to take your time to make sure you understand the options, then follow the two golden rules. First, you must disclose health and lifestyle information so the annuity you are offered is personalised to you and not just a standard rate. Then second, use that information to shop around all the providers for the best rate.”

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