The disparity between the best and worst standard annuity rate has decreased from 20 percent in March 2012 to 8 per cent today, Fidelity Worldwide Investment has said. However, it added that shopping around is still essential.

In February 2012, before the Association of British Insurers (ABI) announced its Retirement Choices Code in March, the best standard annuity rate for a 65-year-old male with a pension pot of £100,000 was £5,020 a year compared to the worst of £4,013. At today’s rates, these figures are £5,427.48 and £4,989.48, respectively.

Fidelity, in conjunction with Annuity Direct, based these numbers on quotes produced by Annuity Direct on 24 February 2012 and 20 February 2013 across the whole market.

Fidelity Worldwide Investment head of DC pensions & workplace savings Julian Webb said: “This narrowing of differentials between annuity prices seems to have been prompted by providers leaving the market and changes in gender neutral annuity pricing. While a tighter market may seem to reduce the need for shopping around, we strongly believe that shopping around is as important now as it ever was.”

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