ANNUITY rates are poor on average while the gap between the best and worst has widened, analysts have found.
A study by Hargeaves Lansdown found the gap between the best and worst rates was 34.93 per cent in July and 31.3 per cent in December.
The company said the difference could cost the holder of a typical annuity with a purchase value of £21,000 around £7,100 in
Loading article content
lost income over a 20-year retirement .
Hargreaves Lansdown found on average more than half of companies were offering rates below what it classed as a "good value" threshold.
This includes those quoting rates at least 10 per cent below the best on offer
Tom McPhail, Head of Pensions Research, Hargreaves Lansdown, said: "It is painfully obvious that some companies are making no effort to offer their customers decent value. For investors who do shop around, competitive rates are available."
He said that in spite of moves by the UK Government to give people greater freedom about what to do with their pensions savings investors are still being rolled over into their existing provider's annuity.
Mr McPhail added: "What's more many pension providers are failing to offer investors a low-cost alternative to annuities, such as a drawdown plan."
The analysis was produced a week after insurance body ABI published its latest Annuity Window research.
Hargreaves Lansdown said some companies were failing to supply data to the ABI for the exercise.
Of 17 providers listed in the ABI's research, Reliance Mutual offered the highest annual annuity of £1,349.40 on savings of £21,000.
The lowest, £1,078.57 was offered by Countrywide Assured.
Scottish Widows paid £1,190.98 and Standard Life paid £1,111.32.