Retirees warned about annuity rate differences

Recent analysis by Just Group (Just) has uncovered significant variations in annuity rates, urging retirees to carefully consider their options when purchasing guaranteed lifetime income products. 

The findings, shared in a recent press release, reveal surprising disparities that could leave older retirees with lower incomes than younger individuals—a phenomenon dubbed the "annuity age trap."

Recent rises in gilt yields as well as slower interest rate cut expectations mean that annuity rates may be a good option for retirees in 2025 due to the stability and returns they provide. However, as the analysis shows, it's important that people research and compare their options carefully.

 Key findings from the analysis 

1. Rate discrepancies 
   • A 70-year-old with a £50,000 pension fund could receive an annual income of £3,560 from the least competitive deal, £71 less than the best deal available to a 65-year-old. 
   • Similarly, a 75-year-old may receive £4,024 annually—£39 less than the top rate for a 70-year-old.
     
     These figures highlight that age does not always translate to better annuity rates, contrary to common expectations. 
2. The importance of shopping around
   • Retirees should explore multiple providers rather than sticking with their pension provider, as loyalty does not guarantee competitive rates. 
   • Providing detailed health and lifestyle information can also lead to improved rates, making transparency essential when negotiating annuities. 
3. The role of professional guidance 
   • Just Group emphasises the importance of seeking advice from annuity brokers, financial advisers, or services like Pension Wise to achieve the best outcomes. 
4. The benefits of annuities 
   • Annuities offer retirees the peace of mind of a steady income for life, eliminating the fear of outliving their savings. However, choosing the right deal is crucial, as these decisions are typically irreversible. 

Take action to secure your retirement income

This analysis reinforces the importance of retirees actively comparing annuity rates to maximise their retirement income. With disparities in offers and the complexities of the market, seeking independent advice can make all the difference. Our experienced Financial Advisers can help clients understand their options and make the best choice for them. Get in touch to find out more about the support we can offer. 

Watch our video to find our more about annuities

Sources: 

• https://www.justgroupplc.co.uk/~/media/Files/J/Just-Retirement-Corp/news-doc/2025/how-shopping-around-ensures-retirees-dont-end-up-with-lower-incomes.pdf
• https://corporate-adviser.com/annuity-rates-soar-into-2025-amid-rising-gilt-yields/ 

Past performance is not a reliable indicator of future performance.

Investment returns are not guaranteed, and you may get back less than you originally invested. The Financial Conduct Authority (FCA) does not regulate tax advice.

This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions. 

The information in this article is correct as at 23/01/25.