Almost three-quarters of pensioners with pots of less than £40,000 do not use the open market option, according to research from Partnership.
Analysing figures from the ABI, Partnership claims 70% of the 270,000 people with small pension pots do not shop around when buying an annuity but simply purchase from their current pension provider.
Partnership claims even retirees whose pension pots are only likely to be worth an annuity of around £2,000 per year could boost their income by 12% by using the OMO.
For those who would qualify for an impaired life annuity, shopping around could boost their annuity income by 19% per year, or a total of £3,292 over their retirement, Partnership claims.
The insurer says the problem appears to be limited to those with smaller pension incomes, as those with pension pots of over £40,000 generally shop around.
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