IFAs are claiming that just 10 of the 40 or so annuity providers offer competitive rates, products and services.
The IFAs, including The Annuity Bureau and Carrington Consultants, say there is a gap of about 25 per cent between the best and worst rates offered in the market.
While they acknowledge that individual circumstances must be taken into account when recommending an annuity, the IFAs claim that some providers, including Canada Life, Prudential, GE and Britannic, stand out as the best, while others, including Allied Dunbar and Scottish Equitable, are among the worst.
IFAs say the worst providers in terms of customer service are those closed to new business, such as Century Life, which manages annuities for companies which no longer want to be in the annuity market.
They blame the disparity on the fact that some providers take a proactive view to competing in the market while others are purely reactive with their rates. The IFAs also cite consumer reluctance to shop around, with some estimates suggesting that only 25 per cent of people take advantage of the open-market option when buying a pension annuity.
Annuity Bureau managing director Peter Quinton says: “This is not likely to change as it has existed for about 10 years. But the political agenda should be watched as the Tories have taken a stance on the grey vote and Labour are likely to follow.”
Carrington Consultants head of retirement William Sallitt says: “Profits can be tight and the risks big. Some companies, such as Allied Dunbar and Scottish Equitable, are not really seeking new annuity business.”