Pensioners could lose around £277m through lack of awareness of enhanced annuity products, says Just Retirement.
In interviews with 210 people, the provider found that 75 per cent were unaware of enhanced annuities for those who smoke or are in poor health.
Although around 40 per cent of people qualify for an enhanced annuity at retirement, only 15 per cent in the survey thought they would be eligible.
The provider also found that, of those people who will retire in the next five years, 54 per cent were not aware of their right to shop around for the best rate.
While 31 per cent said they were likely to look around, 40 per cent were not, despite understanding the logic of looking at a number of products.
Just Retirement says pensioners could get a 15 per cent uplift in their annuity by shopping around. So if 25 per cent of pensioners who are eligible for uplifts from an enhanced annuity fail to take the benefit, this is equivalent to an overall loss of £277.5m on their funds.
Chief executive Mike Fuller says reluctance is based on perceived complexity of the decision and doubt about how much extra money would be gained. He says: “By not shopping around for the best rate at retirement, pensioners are choosing to have less income for the rest of their lives at a time when there is an estimated £30bn shortfall in funding for retirement.”