The warning follows news that Tesco plans to launch a pension annuity service in a bid to get people shopping around for the best retirement income. The supermarket giant joins the ranks of Hargreaves Lansdown, Confused.com and payingtoomuch.com which offer similar services.

While advisers have applauded the move for bringing much needed publicity to annuities and highlighting the need for consumers to shop around, they fear people using these sites will focus on price only and sleep-walk into the wrong products with devastating effects.

Alan Higham of Annuity Direct says while these sites encourage competition, getting the best rate is the final piece of the jigsaw. Consumers need to consider health conditions, inflation and other family members among other things, he says.

“Sadly, many people think it is all about the annuity rate and make bad mistakes in those areas which can’t be fixed later.”

Billy Burrows of The Better Retirement Group says an annuity is for the long term – maybe 30 years or more as we live longer – and shouldn’t be bought in the same way as travel or car insurance.

While he thinks comparison sites like Tesco’s might be suitable for people with small pots who are shopping around on price only, they are not for people with bigger pension pots who are concerned with quality of choice and service.

“A lot of people will like the Tesco experience but others prefer the Waitrose or John Lewis experience. These are people who don’t care just about price but also choice, quality and after-care.”

Alan Mellor, chartered financial planner and managing director of The Annuity Specialist, says a lack of knowledge could lead people down the wrong path.

“The clear problem is clients don’t know what they don’t know,” he says.

“They don’t know about Guaranteed Annuity Rates (GARs), Guaranteed Minimum Pensions (GMPs) and they don’t know enough about enhancements. This brings the clear danger of individuals being allowed to self-prescribe solutions that can have a devastating effect on their future income without any control. And they will be locked into this choice for life. A toxic combination.”

“Not everyone wants or can afford financial advice – but if there was only one time in your life when you saw a financial adviser – reviewing your options at retirement should be that time.”