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&#39Annuitants lose out on £500m&#39

People who bought annuities over the last year without using the open market option could miss out on income totalling more than £500m during their lifetime, according to Britannic Retirement Solutions.

But Britannic says the number of people failing to use the open market option will fall with new rules which require providers to tell clients of their right to shop around for an annuity.

From the beginning of this month, the FSA is requiring providers to send out a factsheet which sets out what consumers should take into account when buying an annuity and how to get the best deal.

The factsheet explains the difference between the types of annuity available on the market and recommends IFAs as one of the ways of finding the best product.

From early next year, the factsheet will also point consumers to the FSA&#39s online comparative tables, which will then include annuity rates.

The ABI estimates that two out of three investors fail to shop around, even though the rate they get can be up to 30 per cent less than the best available on the market.

Corporate development director Bob Bullivant says: “This FSA factsheet is a major breakthrough for the annuity market. The open market option is the only way in which an IFA can advise on a product that shows an immediate benefit for the client for the rest of his life and go on to invest the tax-free cash and review his retirement options.”

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