The Association of British Insurers’ (ABI) Annuity Window comparison tool has found that there is a 31% difference between best and worst conventional annuity rates.
The tool, which is compulsory for all ABI members selling annuities to the public, also found (based on a level annuity for a 65-year-old man, living in the Manchester area, who smokes and has lung disease) that the difference between the best and worst rate for an enhanced annuity based on an £18,000 purchase price is 46%, with Prudential offering the top rate and Friends Life offering the lowest.
The window, which features rates from 24 providers, also identified that Scottish Widows pays an annuity of £839 a year on a savings pot of £18,000, compared against £1,099 from Reliance Mutual.
Laith Khalaf, head of corporate research at Hargreaves Lansdown, said: “The Annuity Window lifts the lid on just what rates insurance organisations are providing.
“It is a positive step forward and is likely to lead to more pressure on those companies offering low annuity rates.”
But Rob Tinsley, managing principal at Aspire To Retire, added: “This is a positive move. However, we need to emphasise that this just doesn’t make simple rate comparison the main focus without taking other factors into consideration.”