More than half of all UK annuity purchases in the past year have shown clients switching from their existing provider, Origo data has revealed.
Analysis of its pensions transfer data has revealed that 55 per cent of policyholders are paying attention to the importance of shopping around to get the best annuity deal, rather than sticking with their current pension providers.
According to Anthony Rafferty, chief executive of Origo, this was hopefully indicative of a trend where "even more people will look to the wider market to ensure the rate they are being offered is the best for them".
He pointed to data from the Financial Conduct Authority earlier this year, which revealed purchases of annuities had risen by 38.7 per cent between the 2022/23 and 2023/24 tax years.
This increased interest was driven primarily by improved annuity rates thanks to a slew of bank base rate hikes, which have pushed up gilt rates.
Rafferty added: “Responsibility for ensuring sufficient income in retirement now firmly sits on individuals’ shoulders. Once an annuity is purchased it cannot be reversed, so getting the best deal at the time of purchase is essential.
“It may be that their current provider offers the best rate for their circumstances, but it is more important than ever that people know they have the option to look around and are exercising that option to switch should it be better value for them to do so.”
FCA data
In April this year, FT Adviser reported on the importance of shopping around to understand the benefits of different types of guarantee period.
At the time, Nick Flynn, retirement income director at Canada Life, told FT Adviser that although annuities could be the "unsung hero" of retirement income, it was important to understand how different guarantee periods could help different clients.
The FCA's data on the retirement income market showed that 75 per cent of annuities came with guarantees attached, and people buying annuities had a strong preference for financial advice.
But it also found the number of people choosing to take regulated advice when entering drawdown had fallen, with more than a third of savers going it alone in the half year to March 2023, according to FCA data.
The regulator's data on the retirement income market, published earlier this year (April 16), showed that between October 2022 and March 2023, 43,366 pots entered into drawdown with no advice or guidance, equivalent to 39.1 per cent.
