Two-thirds of annuities were finalised after customers shopped around for best rates

The number of retirees “shopping around” for the best annuity rates has reached a record high, Just Group says.

The firm’s analysis of Financial Conduct Authority (FCA) Retirement Income Market Data found two-thirds (62%) of annuities this year (2024/25) were purchased after customers had shopped around for the best rates, up from 59% the previous year and 53% the year before.

It found that two in five (40%) of these had done so with professional brokers and 22% with advisers, while 68% overall with large pensions (£50,000 and above) had switched providers.

The proportion of those purchasing annuities, also known as guaranteed income for life (GIfL) products, from their existing provider was low at 38% in 2024/25, down from 41% in 2023/24, and 47% and 58% in the previous two years, respectively.

About half (48%) of annuity buyers received better rates after disclosing their health and lifestyle information, with the difference between the highest and lowest paying annuity around £362 per year at the current rate, which equates to £9,050 over a 25-year retirement (for a healthy 65-year-old with a £50,000 pot).

Just Group group communications director Stephen Lowe said: “It is great to see that more customers are shopping around themselves or using advisers and brokers to compare rates. The statistics hint that the rules introduced in 2019, which obliged pension providers to show existing customers how their own GIfL quote compared with the best available on the open market, are bearing fruit.

“The initiative was designed to help customers spot easily how much they might gain from shopping around and encourage people to switch provider to get the best deal. It’s brilliant to see shopping around become the norm because it means more money in people’s pockets every year for the rest of their lives.”

In June, Just’s analysis of the latest FCA’s Financial Lives Survey demonstrated that a third (33%) of adults aged 50 plus who purchased an annuity in the last four years had not compared the products and prices of at least two providers. More than one third (35%) of the same group bought their annuity from the same provider they used to save with, while a further 12% were unsure if they had done so.

Given differing rates on offer in the guaranteed income for life market, Just stated that ‘zombie buyers’, or those who do not shop around, could miss out on more than £400 a year.