Research shows a 46% difference between the best and worst enhanced annuity rates in some scenarios
Annuity rates off ered by diff erent providers vary by as much as 46%, equivalent to over £14,000 on the income derived from an £18,000 pension pot, it has been revealed.
The fi gures come from an Association of British Insurers (ABI) initiative to bring greater transparency to the annuity market by publishing the diff erent rates offered by members based on 12 example customer profiles. Called Annuity Windows, the scheme is part of the ABI’s Retirement Choice Code, which was launched in March and aims to help people understand their options as they prepare to stop working.
Annuity Windows shows that there is a 31% difference between the best and worst conventional annuity rates available to a 65-year-old man in the Manchester area with £18,000 to spend. On enhanced annuity rates, the diff erence is even more stark, rising to 46%.
Malcolm McLean, consultant at Barnett Waddingham, observed that data highlighted the “poor value for money” currently offered by annuity providers.
He said: “Ensuring that people, after often a lifetime of scraping and saving, secure an appropriate return for their efforts remains a challenge the pensions industry and government must address.”
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