According to a new report from Canada Life around 30,000 savers each year, that’s 2 in 5 people, are losing out around £385 a year in annuity income, which over a 20-year retirement equates to around £7,700 each.
The figures are based on comparing the best and worst annuity rates available and the average purchase price for an annuity (£60,515) available on the open market. Canada Life analysed the Financial Conduct Authority (FCA) retirement income market data and annuity rates in the open market using the Money Advice Service annuity comparison tables on 22nd April 2021.
Canada Life suggests this may be a fear of open market option (FOMO) with 40% of retirement savers are not shopping around to get the best deal.
Canada Life Director of Retirement Income, Nick Flynn said: “Clearly the official data shows that people are failing to seek advice with only 2 in 5 that sought advice and shopped around. Customers will be losing thousands in income over the course of their retirement and once an annuity is purchased you cannot turn back the clock”.
Both regulators, financial advisers and the industry as a whole need to ensure people receive the best value they can for their hard-earned pension savings. Too many people do not shop around and accept the first offer from their pension company. This may be down to trust or lack of awareness of their income.