The gap between the best and worst annuity rate has widened to a four-year high, analysis from Just Group has revealed.

The research discovered that retirees buying guaranteed income for life (GIFL) in October could have generated 16 per cent more income by choosing the best-paying plan over the worst, an increase from the around 4 per cent difference between annuity rates from earlier in the year.

Just Group detailed that the gap was the largest between the best and worst for at least four years, and highlighted the importance for retirees using their pension pots to buy annuities to shop around and be prepared to switch from their current pension provider.

The retirement specialist noted that the worst paying standard GIFL plan would generate £3,137 income a year on a £50,000 purchase price for a 65-year-old retiree in good health.

The best-paying plan would generate £3,642 or 16 per cent more income, equating to £505 a year extra income, or £12,625 over 25 years.

Just Group group communications specialist, Stephen Lowe, commented: “Annuity providers are competing for your business so it’s likely you’ll get a better deal by shopping around – being blindly loyal may well cost you a smaller income for the rest of your life.

“The gap between the worst and best fluctuates typically between 5 per cent and 10 pe cent but recently it has touched 16 per cent which is the highest we’ve seen for nearly four years.

"On a £50,000 pension, that represents more than £500 a year extra income each year for the rest of their life.”

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