- Alongside extra retirement income, consumers call out lower fees, financial stability, and concerns about their incumbent provider as the top reasons to switch.
- Nearly a quarter (23%) of people say they don’t know where to start when it comes to switching provider.
New research1 by Canada Life has revealed that one in eight people intending to purchase an annuity would not consider switching from their existing pension provider to another supplier, even if they could potentially gain additional retirement income2.
The research considers the reasons why pension savers would not shop around before buying an annuity, and the factors that would make them more likely to switch provider. This comes as recent data from the Association of British Insurers revealed that almost a third (31%) of annuity customers purchased their product from their existing pensions provider in 2024.3
Beyond the prospect of additional retirement income, the top three factors that would encourage potential annuity customers to switch from their existing pension provider were lower fees4 (42%), if the provider had a strong reputation for financial stability and security (34%), and if the individual had concerns about their current provider (32%).
Nearly one in three (30%) also would consider switching if the benefits or features on offer were better. Among these, the top three preferred benefits that would motivate customers to switch are the flexibility to choose a guaranteed or inflation-linked income (61%), the ability for your spouse to receive your annuity payments after you die (54%), and flexibility in withdrawals or making changes to your policy (53%).
The primary reason people are unwilling to shop around for an annuity regardless of potential additional income is trust in their incumbent pension provider (40%). A third (32%) stated that they have a good relationship with their existing pension provider, while a quarter (24%) called out good customer service from their incumbent.
Nearly a quarter (23%) of individuals said they wouldn’t know where to start when it comes to switching, and almost a sixth (15%) said they lack the confidence to switch. These figures have risen substantially since 2021, when Canada Life conducted similar research. The number of people unsure where to begin has increased by 9% (from 14% in 2021), and the proportion of people lacking confidence to switch has more than doubled (from 6% in 2021).
Nick Flynn, Retirement Income Director at Canada Life, comments:
“In January we saw a dramatic increase in gilt yields, which spelt good news for annuity rates. While the market has since stabilised somewhat, it remains an ideal time for customers considering an annuity to explore their options and take advantage of the competitive rates available. Whilst having a trusted relationship with a pension provider is beneficial, it should not deter people from shopping around for the best rate available.
“It is concerning that our research found that one in eight individuals would not consider switching provider, irrespective of potential retirement income gains. Most people wouldn’t think twice about shopping around for a better deal on their insurance or broadband – the same logic applies when it comes to an annuity. However, an annuity is for life, not just one year. So, it’s critical to get the best deal.
“It’s also worth noting that whilst ‘free money’ is an obvious plus, certain annuities come with added benefits that could suit you better as well. For example, some annuities provide flexibility in being able to make changes to the policy, while others will continue to pay a regular income to a loved one after you die.
“Purchasing an annuity is a significant financial step and an irreversible decision, so it’s understandable that some people lack confidence or don’t know where to start. We always recommend speaking to a financial adviser or annuity broker who can help you understand the choices available. At a minimum, independent research or guidance from sources such as Pension Wise is essential in helping you understand your options and the steps you can take to find the right annuity product for you.”
-ENDS-
Notes to editors
- Research conducted by Opinium, November 2024. Sample survey - 500 UK Adults aged 55+ with a defined contribution pension, who are not yet taking an income and plan to buy an annuity.
- Respondents were asked if a different pension provider offered them an additional income of up to £1000 extra income a year for the life of their annuity, if they would be likely or unlikely to switch from their existing pension provider when buying an annuity. One in eight (12%) said they wouldn’t be willing to switch.
- https://www.abi.org.uk/news/news-articles/2025/2/another-post-pension-freedoms-record-for-annuity-sales/
- Such as administrative fees, expense charges, and management fees.
Enquiries:
Press enquiries should be directed to:
Elle McAtamney, Canada Life, +44 7913 568213, elle.mcatamney@canadalife.co.uk
About Canada Life:
Canada Life is part of a group of companies controlled by Great-West Lifeco Inc., a Canadian headquartered, international financial services holding company with interests in life insurance, health insurance, retirement and investment services, asset management and reinsurance businesses. Through its subsidiary companies, Great-West Lifeco operates in Canada, the United States, and Europe. Great-West Lifeco trades on the Toronto Stock Exchange under the ticker symbol GWO and is a member of the Power Corporation group of companies.
Canada Life Limited began operations in the United Kingdom (UK) in 1903 and provides UK individuals and businesses with a range of retirement, investment, insurance and wealth solutions. Canada Life offers individual annuities, pension de-risking solutions, home finance, estate planning and investment options, and workplace protection products.
Canada Life Limited (no.973271) is registered in England and Wales, authorised by the Prudential Regulation Authority, and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Stonehaven UK Limited (no.05487702), trading as Canada Life, is registered in England and Wales and is authorised and regulated by the Financial Conduct Authority. Canada Life International Limited (no.033178C) and CLI Institutional Limited (no.108017C) are Isle of Man registered companies authorised and regulated by the Isle of Man Financial Services Authority. Canada Life International Assurance (Ireland) DAC (no. 440141) and Canada Life International Assurance (Ireland) DAC are authorised and regulated by the Central Bank of Ireland.
Canada Life Asset Management is the brand for investment management activities undertaken by Canada Life Asset Management Limited (no.3846821), Canada Life Limited and Canada Life European Real Estate Limited (no.03846823). Canada Life Asset Management Limited is authorised and regulated by the Financial Conduct Authority.
Please note that while Canada Life Limited and Canada Life Asset Management Limited are regulated as stated above, property management and the provision of commercial mortgages are not regulated activities.