The gap between the best and worst-paying annuities has “spiked” in recent weeks, reflecting the rise in bond yields, analysis by Just Group has revealed.

The research found that an annuity buyer who was 70 years old would secure nearly 20 per cent more income by choosing the best deal over the worst, adding up to £7,400 more income every 10 years from a £50,000 pension fund.

Meanwhile, the gap at age 65 is 13 per cent, equal to £4,380 more income over 10 years from a £50,000 pension.

Just Group said that the gap between the best and worst-paying annuities has trended higher for more than a year but has peaked in recent weeks.

The company said this reinforced the need for anyone condescending annuities, particularly older buyers, to ensure they shop around for the most competitive deal and could potentially add thousands to their incomes over retirement.

Just Group communications director, Stephen Lowe, said it was likely that providers of guaranteed income for life solutions were responding to movements in market rates.

“Guaranteed income for life solutions pricing is influenced by the returns on gilts and bonds, which have been moving up recently,” he continued.

“It’s a competitive market and annuity providers will be watching the changes, with some responding more quickly than others depending on commercial considerations.

“Current annuity rates are attracting a lot of interest from retirees wanting guaranteed income but it is unlikely your own provider will pay the most.”

“Avoiding inferior rates requires disclosing health and lifestyle information that could push the rate higher and then shopping around for the best deal.”

He suggested that all retirees should take the free, independent and impartial guidance from the Pension Wise service.

He also added that professional annuity brokers or financial advisers can help retirees choose options and scour the market for the best deal.

---