New reforms recently announced will require annuity providers to inform individuals (when purchasing an annuity) if a higher annuity income can be obtained elsewhere from another insurer. For individuals in poor health i.e. those suffering with high cholesterol, blood pressure, or may have a life limiting condition “enhanced annuities” are often available. It is estimated that this type of annuity can increase the level of income provided by up to 40 per cent. The new reforms will require providers to compare standard annuities for those in good health, despite expectations that a large proportion of individuals looking to purchase an annuity may be eligible for an “enhanced annuity”.

It is currently estimated that each year around two-thirds of all annuities sold are issued by insurers with whom the individual invests their pension pot. Consequently, as a result of individuals not searching the “open market” for the best deal, it is feared that the majority of annuities could have provided a higher level of income, if they had purchased the annuity with another insurer.