Retirees lose £8,460 of pension income: Make sure YOU don't make THIS mistake

Around half of retirees who have used pension savings to buy an annuity since 2015 will lose out on an average £8,460, found provider Retirement Advantage.

Payout rates from the insurance product vary by provider, but around half of people buying annuities still fail to shop around.

One in every two people simply stay with their current pension provider, in effect settling for a poorer retirement.

Fewer people buy annuities after pension reforms introduced in 2015 removed the obligation.

The products can be suitable for some people looking to turn savings into a stable income that lasts for the rest of their life.

However, too many people still end up with a poor deal after accepting the first offer.

Payouts can be higher for people with health issues, who are likely to have lower life expectancy.

But it’s feared too many people in this situation are not getting special rates and losing out.

Experts warned the issue of shopping around also affects over areas of the pension market, including drawdown – which has become more popular over the past two years.

Andrew Tully, pensions technical director at Retirement Advantage, said: “Taking some simple steps at the start of the process can ensure you not only get the right annuity for your circumstances but can also make a big difference to the income you receive over the course of your retirement.

“We shouldn’t lose sight of the issue of poor value and the lack of shopping around also extends to the drawdown market.

“While drawdown is not a one off purchase like an annuity, it is still important people look around for the right product, as you can easily find yourself caught out by high charges.

“Seeking the right professional financial advice will ensure you not only buy the right product but get the best value for your personal circumstances.”