Briefing Notes

Briefing Note 102 - What is the impact of not shopping around for annuities?

The UK annuity market is undergoing a transition as a result of the removal in 2015 of the effective requirement for those with Defined Contribution (DC) savings to purchase an annuity, “Freedom and Choice”.

This Briefing Note explores the annuity market two years on from Freedom & Choice and sets out changes in volumes being bought, use of DC savings in retirement, and possible developments within the annuity market.  It also explores the amount of money that people might be forgoing by not shopping around for the best annuity rate.

It finds that annuity quotes sourced today show that the difference between the highest and lowest quote for an individual could vary by up to 40%. Those who do not shop around for a good annuity rate may, therefore see their retirement income significantly decreased as a result, reducing standards of living in retirement.