1 in 8 annuity buyers unwilling to shop around

One in eight people intending to purchase an annuity would not consider switching from their existing pension provider to another supplier, even if they could potentially gain additional retirement income. New research by Canada Life revealed that nearly a quarter, 23%, of people say they don’t know where to start when it comes to switching provider. Almost a sixth, 15%, said they lack the confidence to switch. The figures have risen substantially since similar research in 2021. The number of people unsure where to begin has climbed by 9% (from 14% in 2021), and the proportion of people lacking confidence to switch has more than doubled (from 6% in 2021). The study suggested that beyond the prospect of additional retirement income, the top three factors that would encourage potential annuity customers to switch from their existing pension provider were lower fees (42%), if the provider had a strong reputation for financial stability and security (34%), and if the individual had concerns about their current provider (32%). Nearly one in three, 30%, said they also would consider switching if the benefits or features on offer were better. Among these, the top three preferred benefits that would motivate customers to switch are the flexibility to choose a guaranteed or inflation-linked income (61%), the ability for your spouse to receive your annuity payments after you die (54%), and flexibility in withdrawals or making changes to your policy (53%). The main reason people are unwilling to shop around for an annuity regardless of potential additional income is trust in their incumbent pension provider (40%). A third (32%) stated that they have a good relationship with their existing pension provider, while a quarter (24%) called out good customer service from their incumbent. The research comes soon after recent data from the Association of British Insurers revealed that almost a third, 31%, of annuity customers purchased their product from their existing pensions provider in 2024. Nick Flynn, retirement income director at Canada Life, said: “It is concerning that one in eight individuals would not consider switching. Most people wouldn’t think twice about shopping around for a better deal on their insurance or broadband – the same logic applies when it comes to an annuity. However, an annuity is for life, not just one year. So, it’s critical to get the best deal.” Research conducted by Opinium, November 2024. Sample survey - 500 UK Adults aged 55+ with a defined contribution pension, who are not yet taking an income and plan to buy an annuity.

1 in 8 annuity buyers unwilling to shop around

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