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The £13,240 question – why shopping around for your annuity still pays

Canada Life has shown how shopping around for your annuity remains one of the best ways of securing the best income from your pension. By taking some simple steps, the company has worked out over a typical 20-year period, the difference between the best and worst annuity in the open market could pay an extra £13,240 in income (£662 a year). This is based on a pension of £150,0001.

In reality, the difference between the best and worst deals in the market could be even bigger, Canada Life says, as many providers don’t openly publish their annuity rates.

Nick Flynn, retirement income director at Canada Life comments on the research:

“Saving hard for your dream retirement is one part of an important jigsaw. Once you’ve taken the decision to convert your pension into a lifetime income using an annuity, never simply accept the offer from your existing pension company, as you may not always get the best deal. The decision can’t be reversed, so it’s vital to take the time to make an additional step in the process, and shop around for not only the best rate, but the right shape annuity for your individual circumstances. Shopping around for the best deals on car insurance, securing the best mortgage rate or getting a great deal on the high street is now common-place, and so should be getting the best from your hard-earned savings.

“Even in one of the straightforward scenarios, our calculations show the difference in income over a typical 20-year retirement can add up to thousands of pounds. That’s before you factor in health and lifestyle related questions, which can add additional income.

“With the considerable interest from customers seeking to capitalise on annuity rates where they are today, it might be easy to lose sight of some of the simple measures people can take to ensure they extract as much value from their pensions as possible. Seeking help from a specialist annuity broker or advice from an adviser should always be part of any buying process.”

 

Today, a benchmark annuity for someone aged 65, with no pre-existing health or lifestyle conditions, would pay in the region of 7%2. This annuity rate can increase significantly when disclosing common health or lifestyle conditions, such as diabetes, high blood pressure or being a smoker. Age can also have a big influence on the annuity rate offered.

ENDS

Enquiries:

Press enquiries should be directed to:

Elle McAtamney at Canada Life, elle.mcatamney@canadalife.co.uk

 

Notes to editors:

  1. Source: Open market annuity rates taken from https://www.moneyhelper.org.uk/en/pensions-and-retirement/taking-your-pension/compare-annuities, based on a 65 year old, £150,000 purchase price, 10-year guarantee, no health or lifestyle factors. Rates as at 27.11.2023. In this example, the best quote would produce an annual income of £10,352, with the worst value paying £9,690, £662 a year less income. Over 20 years that would equate to £13,240 in less income.
  2. Canada Life benchmark annuity rates over time, £100,000 purchase price, 10-year guarantee, no health or lifestyle factors. 15-year gilt yields sourced from ft.com.

About Canada Life:

Canada Life is part of a group of companies controlled by Great-West Lifeco Inc., a diversified financial services holding company headquartered in Winnipeg, Canada. Through its subsidiary companies, Great-West Lifeco has operations in Canada, the United States, and Europe. Great-West Lifeco and its insurance subsidiaries have received strong ratings from major rating agencies.  Great-West Lifeco has over 38 million customers worldwide and £1.532trillion assets under administration (as at 31 December 2022). 

Canada Life Limited began operations in the United Kingdom in 1903 and looks after the retirement, investment and protection needs of individuals and companies alike. As well as providing stability and security through its individual contracts, Canada Life Limited has grown and maintained its position as the market leading provider of group insurance solutions.1 Canada Life acquired Retirement Advantage on 3rd January 2018 for an undisclosed sum. The acquisition added over 30,000 retirement income and equity release customers and more than £2 billion of assets under management including a £1.5 billion block of in-force annuities to Canada Life. 

Canada Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Canada Life International Limited and CLI Institutional Limited are Isle of Man registered companies authorised and regulated by the Isle of Man Financial Services Authority. Canada Life International Assurance Limited and Canada Life International Assurance (Ireland) DAC are authorised and regulated by the Central Bank of Ireland. 

Stonehaven UK Limited, registered in England and Wales no. 05487702. Registered office: Canada Life Place, Potters Bar, Hertfordshire EN6 5BA. 

Stonehaven UK Limited is authorised and regulated by the Financial Conduct Authority. 

www.canadalife.co.uk 

  1. Canada Life MI & Swiss Re, 2022