Retirees who buy annuities later in life are most at risk of missing out on extra lifetime income by failing to explore the market, Just Group has found.

The analysis of market data by Just Group found that the gap between the best and worst deals are much higher for those aged 75 compared to those aged 65.

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 aged 70 (15%) and at aged 65 (13%).

In cash terms, Just Group found that a health 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 £4,080 from the least competitive, working out at a 16% difference of £650.

This compares to a best-worst difference of £500 a year at age 70 and £400 at age 65.

Group communications director at Just Group, Stephen Lowe said: “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.

“The certainty of annuity income makes it relatively more attractive with age as people seek to reduce the risk of outliving their assets. For those who can afford to, deferring annuitisation or buying annuities in tranches can work well.

“But it still depends on getting the best deal when you do decide to buy and not just accepting the first offer. “That means disclosing health and lifestyle information to get a personalised rate. Then taking that information into the open market to see which providers are the most competitive. The better the deal the more income you will enjoy for the rest of your life.

“It’s quite shocking that the Financial Conduct Authority 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. There are no second chances when you buy an annuity. It’s important to do it right first time.”

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