The gap between the best and worst-paying annuities has spiked higher in recent weeks amid bond-market volatility, according to analysis of latest rates by Just Group.
The retirement specialist said the new figures show the importance of shopping around to find the best annuity provider.
It noted that an annuity buyer aged 70 would secure nearly 20% more income by choosing the best deal over the worst. This would add £7,400 more income every 10 years from a £50,000 pension fund.
The gap at age 65 is 13%, equal to £4,380 more income over 10 years from a £50,000 pension.
The difference has been trending higher for more than a year but has reached a peak in recent weeks, Just Group said.
It said this reinforces the need for anyone considering annuities – and particularly older buyers – to ensure they shop around for the most competitive deal.
Stephen Lowe, group communications director at Just Group, said that it was likely that providers of Guaranteed Income for Life (GIfL) solutions were responding to movements in market rates.
He said: “GIfL pricing is influenced by the returns on gilts and bonds, which have been moving up recently. It’s a competitive market and annuity providers will be watching the changes, with some responding more quickly than others depending on commercial considerations.
“Current annuity rates are attracting a lot of interest from retirees wanting guaranteed income, but it is unlikely your own provider will pay the most. Avoiding inferior rates requires disclosing health and lifestyle information that could push the rate higher and then shopping around for the best deal.”
Lowe added that all retirees should take the free, independent and impartial guidance from the government-backed Pension Wise service.
Just Group plc, a FTSE-listed specialist UK financial-services company, manages more than £25bn of customers’ retirement savings and has helped customers release over £6.8bn from their properties.
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