A report by Retirement Advantage analysed industry data for the first two years of pension freedoms and was based on the number of people who bought an annuity since April 2015.

Retirement Advantage research found that 50%, or just over 90,000 people, did not shop around, meaning that over the course of a 20-year retirement, the average annuity purchaser would lose just under £8,500 of income.

Using the average value of an annuity purchase, which is £55,700, Retirement Advantage found the difference between the average standard rate and the average enhanced rate, equated to £423 a year.

Between April 2015 and June 2017, approximately 180,900 annuities were purchased in the UK.

Andrew Tully, pensions technical director at Retirement Advantage, said: “Unfortunately the pension freedoms have given people a licence to lose money, as half of those buying an annuity fail to shop around and get the best deal. This situation has actually got worse since April 2015.

“We shouldn’t lose sight of the issue of poor value and the lack of shopping around also extends to the drawdown market. While drawdown is not a one off purchase like an annuity, it is still important people look around for the right product, as you can easily find yourself caught out by high charges.”