Shopping Around for an Annuity

Want us to do the shopping around for you? Call us free on 0800 098 7050 or complete our free annuity questionnaire and we will compare the whole market for you. Buying an annuity is one of the most common ways to turn your pension savings into a guaranteed income for life — but it’s also an irreversible decision. Shopping around before you buy could increase your retirement income by up to 60%, yet many people miss out simply by accepting the annuity offered by their existing pension provider.

Why Shopping Around Matters

You don’t have to accept the annuity offered by your existing pension provider. Using your Open Market Option (OMO), you can take your pension fund to a different provider to secure a higher rate. This also gives you access to a wider range of products — for example, if you have a medical condition or lifestyle factor, you could be eligible for a significantly higher income through an Enhanced Annuity.

Want to understand the different annuity types available before you compare rates? Read our guide to Annuity Options →

Step-by-Step Guide to Buying an Annuity

Step 1 — Your wake-up pack

Around six months before you retire, your pension provider will send a wake-up pack confirming the value of your pension pot, the annuity types available, and the importance of shopping around rather than automatically accepting their offer.

Step 2 — Your follow-up pack

Around ten weeks before retirement, a follow-up pack arrives stressing the importance of making a decision. Neither pack includes an application form.

Step 3 — Decide on advice

You can choose to take financial advice, or compare the market yourself. A good adviser, or comparison service, will ask about your marital status, any medical or lifestyle conditions, whether inflation protection matters to you, and whether you hold other pension pots.

Step 4 — Get a personalised illustration

Your chosen provider will give you a personalised illustration including your quote, available options, and whether a product such as an Enhanced Annuity could apply to you.

Step 5 — Transfer your funds

Once you’ve chosen your annuity and provider, your existing pension provider will release your funds to the new provider. Your annuity is typically set up within 30 days.

Advised vs Non-Advised

Buying an annuity is a significant decision, so seeking advice can be valuable. An adviser will research the market on your behalf, make a recommendation based on your goals, and handle the transfer of your pension funds.

Alternatively, a non-advised route — like our annuity comparison service — provides clear information on the types of annuity available and helps you compare your options, without giving a personal recommendation. This is typically a more cost-effective route if you’re comfortable making the final decision yourself.

You’re also entitled to free, impartial guidance on your pension options through Pension Wise, the government’s guidance service.

When Not to Shop Around

Shopping around isn’t always the right move. If your existing pension includes a Guaranteed Annuity Rate (GAR), it’s worth checking what rate applies — some GARs offer as much as 10%, which can be considerably higher than anything available on the open market. In these cases, staying with your existing provider is often the better choice.

We will not provide you with advice or recommendations as part of our annuity comparison service — we research the whole of the market and present you with the best available rates, and it is your decision how to proceed. Annuity purchase is irreversible, so we always recommend comparing the whole market before deciding.

Retirement Professionals Ltd is an appointed representative of pi financial ltd, authorised and regulated by the Financial Conduct Authority. FCA number 622943.