Punter Southall Aspire’s Pension Potential has today revealed how a saver was offered an annuity which would have left him £10,000 a year worse off for life.
He was using the online comparison tool to shop around for an impaired annuity, which are typically worth more because poor health means a shorter life span.
But in this case, the difference between the best and worst quote was 73 per cent or £13,759 compared to £3,700: £10,059. This was based on what he could buy with a £145,000 pension pot.
Punter Southall Aspire chief executive Steve Butler said: “This shocked us. If ever there were an example of why everyone should shop around for an annuity, this is it.
“Had this client gone with the provider which made him this pitiful offer without checking what else was on the market, it would have ruined him.
“We know we sound like a broken record when we say check EVERY annuity on the market but it remains absolutely critical to planning for retirement. Yes, this is an extreme example but demonstrates how you should never accept just one quote.
“We obviously want everyone to use Pension Potential but, frankly, if it means someone is saved from making a disastrous decision, compare what’s out there any way you can – there is no shortage of guidance.”
Other quotes were more in line with the top one with £13,159 and £8,191 respectively. Impaired annuities take into account the impact of your health on how long you will live.
The average disparity across general annuity enquiries Pension Potential has managed was, by contrast, 13 per cent.
“But even 13 per cent can translate into hundreds or even thousands of pounds more a year. As we know, every pound counts as we continue to endure a cost-of-living crisis. Once you’ve signed, there’s no going back,” added Steve.
In general, annuity rates, which tend to move up in line with interest rates, are at their highest point for 14 years, meaning a renewed focus on the part they can play in securing a guaranteed income in retirement[i].
[i] [i] https://www.professionaladviser.com/news/4062388/annuities-vogue-million-pre-retirees-considering