By James Tanswell

For some, there is no greater feeling than getting a good deal on something. Whatever it is, from car insurance to the car itself; getting the most for your money can be incredibly satisfying.

However, new research from Retirement Advantage suggests that retirees are missing out on a total of £765 million in Annuity income, simply by not shopping around.

This equates to the average person losing out on £8,460 over the course of their retirement; money that would no doubt be better off in your pocket than that of your pension provider.

How many pensioners are missing out?

Retirement Advantage reviewed data supplied by the Association of British Insures (ABI) for the first two years of the new Pension Freedoms; introduced in April 2015. They found that over the course of 24 months, 180,900 Annuities had been purchased. 50% of these people failed to shop around before agreeing on their Annuity, meaning that an estimated 90,450 pensioners will be £8,460 worse off over a 20-year retirement.

Andrew Tully, Pensions Technical Director at Retirement Advantage, commented: “Unfortunately the pension freedoms have given people a licence to lose money, as half of those buying an Annuity fail to shop around and get the best deal. This situation has actually got worse since April 2015. Taking some simple steps at the start of the process can ensure you not only get the right Annuity for your circumstances but can also make a big difference to the income you receive over the course of your retirement. We shouldn’t lose sight of the issue of poor value and the lack of shopping around also extends to the drawdown market. While drawdown is not a one off purchase like an Annuity, it is still important people look around for the right product, as you can easily find yourself caught out by high charges. Seeking the right professional financial advice will ensure you not only buy the right product but get the best value for your personal circumstances.”

So, how can I get the best deal on an Annuity?

The first step to getting the best deal on a pension product may be evident by now; shop around! Many would balk at the idea of accepting a car insurance renewal quote without comparing the market, and this is no different. You may not get a stuffed meerkat, or cinema tickets for doing so, but the saving of £8,460 should just about make up for it.

Shopping around means not taking the first Annuity you are offered. It sounds obvious, but not everybody knows that looking elsewhere is even possible. A study earlier this year conducted by LV= suggested a ‘mis-buying crisis’ among those set to retire, with awareness of pension products at an all-time low. Shopping around for an Annuity is absolutely possible, and should be done before making your decision. You should also check that an Annuity is the right option for you in the first place.

If you are in ill health, you may be eligible for an Enhanced Annuity. This means that your income will be higher to offset a potentially significantly lower life expectancy. Both lifestyle factors and medical conditions will be considered, such as:

• Smoking status 
• Diabetes 
• High blood pressure 
• Heart disease 
• Cancer 
• Kidney failure 

Whilst most financial products will penalise you for being ill or certain lifestyle choices, being honest when buying an Annuity could increase your income so that you get to use more of your pension pot.

Another way to get the best deal on an Annuity, or to work out if it’s the best option for you, is to work with a financial adviser. This could save you a significant amount of time and money, ensuring that you don’t become one of the 90,450 people to lose out.

For more information about your pension, or for a more in-depth discussion about planning for your retirement, don’t hesitate to get in touch by phone or email.