Retirees have been encouraged to 'shop around' for the best annuity rates, after analysis by Just Group found that annuity rates on offer to a 70-year-old aren’t automatically better than those available to a 65-year-old.

Their research suggested that in some cases, people are offered lower rates than are available to those five years younger despite having significantly lower remaining lifespans.

According to the research, a 70-year-old with a £50,000 pension fund would receive £3,560 a year from the least competitive deal, which is £71 a year less than the current best offer to a 65-year-old.

The worst deal for a 75-year-old is £4,024, which is £39 a year, less than the best for a 70-year-old.

Therefore, retirees seeking the security of a guaranteed income for life should shop around for the best deal, according to Just Group.

Just Group communications director, Stephen Lowe, said their research “reinforces the importance” of retirees shopping around for the best rate when buying a guaranteed income for life.

“You may have saved with your current pension provider for years but that is no guarantee that they will offer you a competitive rate. In some cases, retirees are being offered rates that deliver less income than people five years younger can secure,” he added.

“Annuities give people peace of mind to spend what they receive without worrying it will run out during their lifetime. But you have to get the choice right the first time – finding the deal that will deliver the best income. That means shopping around and disclosing health and lifestyle information that could push up the rate.”

Lowe also encouraged all retirees to take free, independent, and impartial guidance from the government-backed Pension Wise service.

Overall, average annuity rates for a healthy 65-year-old have increased by 2.5 per cent since January 2024, according to the Standard Life annuity rate tracker.

This has added £3,360 and £3,720 to the total lifetime income expected for a healthy 65-year-old man and woman, respectively.

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