Quote: Insurers are from Wednesday making public the rates they pay on annuities in a move that exposes that pensioners are being offered rates up to 30% below the best deals on the market.
The Association of British Insurers' annuity table offers the 420,000 pensioners seeking an annuity, which converts their savings into a set income for life, the chance to compare rates.
It shows the rates offered by members for up to 12 different customer profiles, based on prices from two months ago, highlighting the huge disparity in the industry. The table shows that a 65-year-old with £24,000 of pension savings and no health problems can get £1,099 a year from Reliance Mutual, but this sinks to just £839 with Scottish Widows, after a 25% tax-free lump sum is taken. Someone who has smoked for more than 10 years with lung disease could get £1,778 a year from Prudential owing to a dramatically reduced life expectancy.
Tom McPhail, head of pensions at Hargreaves Lansdown, welcomed the move. He said: "It is highly unlikely that their existing pension company will offer them the best deal, so shopping around is absolutely vital."
However, the move follows calls for pension savers near retirement to consider putting the brakes on committing their fund to an annuity purchase to avoid paying over the odds for little income. Alan Higham of Annuity Direct stressed that pensioners are currently being offered extremely poor value for money in the annuity market, with a 65-year-old expecting to live for around 25 years getting a return of around 3% on the best annuity rate. "The poorest rates are even worse, so it's vital people seek advice or they face having to live until 100 before they get value for money." He criticised the ABI table for failing to include all providers. "Hodge Life, which often offers the best rates, isn't included as it's not an ABI member." | 
