Enhanced annuity rates are falling for both men and women, widening the gulf between the best and worst deals.
According to MGM Advantage, the difference between the income paid on top and bottom quartile enhanced annuities is continuing to grow, and they are warning that thousands of pounds worth of retirement income could be missed.
Their annuity index shows that over an average retirement, men could now be £10,129 worse off and women £11,351 worse off if they chose a bottom quartile enhanced annuity for their £50,000 pension pot.
The Index also shows that annuity rates have fallen by nearly three per cent since June 2009.
Craig Fazzini-Jones, director at MGM Advantage said: "There are significant differences between the best and worst annuity rates for conventional and enhanced annuities, making it more crucial than ever to shop around for the best deals.
"And, with annuity rates falling and likely to continue falling, it's a good time to consider alternative retirement income solutions that can offer more flexibility than a fixed level annuity to maximise retirement income over the longer term.”
The news comes as annuities hit the headlines following the Government’s recent decision to scrap compulsory annuitisation and offer pension savers more options for retirement income.
With annuity rates floundering, Nick Scarrett, head of investment and pensions at Fair Investment Company says it should encourage savers to look for alternatives: "Instead of being forced to buy an annuity at 75 and having to take the rates available at that time, pensioners are being given the choice of when and even if they want to buy an annuity with their pension fund," he said.
"I think it is a very positive move; not only will it mean that people have more choice, but hopefully it should go some way to encouraging people to save into a pension scheme.”
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