Stephen Lowe, group communications director at retirement specialist Just Group, said: “The good news is that shopping around rates have improved markedly – for many years the data showed more than half of people buying their annuity from their own pension provider which may be convenient but is unlikely to provide the highest income.
“The bad news is that four in 10 people are still buying in house. It’s a competitive market and it is very unlikely that your own provider will offer the top rate – switching is the closest thing you will find to getting ‘free money’ in the financial world.”
He said that people thinking of accessing pension money should take the free, independent and impartial guidance from Pension Wise or enlist the services of an annuity broker or a financial adviser who can help scour the market for the best deal.
“Those entering drawdown are also more likely just to roll over into whatever their current provider is offering – nearly two-thirds (66%) stick with their current provider. Consumer inertia remains a potent force in the financial world and is preventing people from getting the best value.”
Rob Hillock, Senior Manager in the Personal Financial Planning team at leading independent consultancy Broadstone, said: “The increase in annuity rates has fed through into a significant rise in sales through 2023/24 as pension savers rush for security and to lock in elevated rates. Given annuities offer peace of mind that retirees’ money will not run out during retirement it is perhaps unsurprising that more attractive rates have led to a surge of popularity.
“Overall, the picture in the retirement income market is of more people reaching retirement with Defined Contribution pensions leading to an increase in access and money flowing into these products. It is disappointing therefore to see that usage of regulated advice has dipped with just one in three pensions accessed for the first time receiving regulated, independent support.”
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