Four in 10 Friends Provident pension holders took out an annuity with the insurer during the first six months of 2009, despite the fact that it currently pays a poor rate compared to other large insurance companies.
The news highlights the need for pension policy holders to shop around when it comes to purchasing an annuity, as the difference could be significant.
Commenting on the revelations, Nigel Callaghan from Hargreaves Lansdown told the Daily Mail: "It's great that 60 per cent of their pension clients shop around for an annuity, but the remaining 40 per cent are largely getting a second rate deal."
According to a Friends Provident spokesperson, the low value of many clients' pension pots means that they are unable to shop around for an annuity, they told the Daily Mail:
"Much of our retained business is for those with smaller pension pots.
"Many are for amounts of less than £10,000 where the saver finds it difficult, if not impossible, to shop around on the open market."
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