More than 30% of people aged over 60 are confused about annuities, research conducted by Age UK has found.
The survey of 2,000 people showed 31% of those who have a defined contribution or voluntary contribution pot were not made aware by their provider that they can shop around for an annuity.
A third did not know about the open market option (OMO) and 38% were not aware medical conditions and lifestyle factors can affect their annuity rate.
Age UK managing director Gordon Morris said he was disappointed to see customers being let down by some pension providers who need to be clearer about the OMO.
"This is a once in a lifetime purchase, so the industry as a whole has to do more to support customers and provide them with the information they need to pick the right product for their lifestyle and needs," he said.
The Association of British Insurers' code of conduct on annuities is due for implementation in March 2013.
It requires providers to start communications about annuities earlier. They should also prompt savers to gather quotes from other providers and highlight alternatives such as enhanced annuities.
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