Despite the success of industry initiatives to speed up annuitisation, delays in transferring
pension savings into retirement income cost pensioners up to £127 a week, warns Virgin Money.
And the losses will be even higher if savers miss out on the best rates due to financial volatility - the income on a £100,000 fund has dropped 7.2 per cent in the past year which is equivalent to £520 a year, says Virgin Money.
In fact people retiring now are as much as £1,125 a year worse off than they would have been in November 2008 at the height of the financial crisis, Virgin Money analysis shows.
The ongoing campaign headed by the Association of British Insurers through the Origo Options service has cut average waiting times to transfer pension funds into an annuity to 11 calendar days from the previous average of 31 days.
That, says Virgin Money, is a massive advance - but with a £100,000 fund yielding income of £6,651 for a 65-year-old man and £6,270 for a 65-year-old woman a delay of just a week could mean they miss out on £127 and £120 respectively.
The worst offenders on annuity transfers can take as long as 51 days - and a 10-week delay could cost £1,270 or £1,200.
A year ago the best rates for a 65-year-old man produced £7,171 while in November 2008 it was £7,776 a year, based on an £100,000 fund. For a woman the figures were £6,712 a year ago and £7,320 in November 2008.
Virgin Money urges all people approaching retirement to shop around to find the best annuity rates across the whole of the market, rather than simply choosing the annuity on offer from their pension provider.
"Buying an annuity is a once-in-a-lifetime decision which pensioners have to literally live with,” said Virgin Money's Grant Bather. The income is fixed for life and there are no second chances.
"When people are living longer in retirement the losses from delays really mount up. If you miss out on the best rates then the loss is compounded.
"The ABI's Options programme has been a huge success which has delivered great benefits but the industry as a whole should be doing everything possible to ensure savers get the best deal possible."
