The gap between the best and worst annuity rates reached its highest level in more than four years in April 2023, analysis from Just Group has shown.

There was an almost 18 per cent income gap between the least and most competitive annuity providers.

This corresponds to a difference of more than £500 a year for a 65 year old with a £50,000 pension.

A 65 year old in good health with a £50,000 pension would receive £3,470 (6.94 per cent) a year with the most competitive provider, compared to £2,952 (5.9 per cent) a year with the least competitive.

According to the Association of British Insurers, more than £1bn of annuities were bought in the first three months of 2023.

Just Group group communications director, Stephen Lowe, stated that while it was encouraging to see more retirees considering investing their pension pot in an annuity, some providers were pricing far more competitively than others.

“After many years working towards higher take-up, it is good to see the number exercising their ‘open market option’ right to shop around rising to 64 per cent but that still means more than one-third are likely to be missing out on income,” he continued.

“The easiest way to shop around effectively is to engage an annuity broker or a regulated financial adviser who can access all the latest prices on the market and suggest the most suitable options for each client in terms of spouse’s pensions, death benefits and inflation-protection.

“It is important retirees divulge their medical history and lifestyle factors because that can make a big difference to the amount of income on offer.

“Annuities are the only retirement solution that offer guaranteed income for life which removes investment and longevity risk. Retirees often like to know they are receiving a core flow of secure income that they can spend this month knowing more is coming their way next month.

“It also offers retirees more freedom in how they use any pension savings they have not turned into a guaranteed income.”

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