People looking to use their private pension to purchase an annuity, or income for life, can compare the rates of different insurance firms online.

The financial services watchdog has responded to consumer confusion by giving customers the chance to shop around for their annuity rate. The ‘open market option’ allows those with pension plans the option of sticking with their existing pension provider or switching to a firm offering a better rate.

Consumers key in their details such as the actual size of their pension pot, their exact age and the type of annuity they would like.

An independent table is then produced in response to the information given, which shows how much monthly income they could receive from their pension pot.

The ‘open market option’ came into force under new FSA rules introduced last autumn, giving consumers the right to switch their pension to give them the best annuity rate.

All pensions firms are now required to write to their customers nearing retirement making them aware of their rights.

The FSA tables will also display information on providers that offer enhanced annuities for consumers suffering ill health and the figures are updated on a daily basis.

Alan Grant, Manager of the FSA tables commented, ‘Our independent online tables will make it much easier for you to shop around because they provide rates for your precise age and size of pension pot. You can then make a shortlist of annuities to investigate further.

‘Taking the time to shop around is important because our research shows it could boost your retirement income. And once you’ve bought your annuity, you’re stuck with it for life – you can’t change your mind and switch to another provider or a different type at a later date.’