The over 55 advice specialist warned many online annuity broking services guarantee a better deal but fail to offer the best rates as they do not search the whole of the market.

It said about 73,000 pensioners used the top 50 online annuity brokers in the 12 months to March 2013 cashing in just under £3bn from pension pots.

However, on an average fund of £39,748 the difference between the best rate and a better rate can be as much as £457 in income a year, KRS found. This works out to £33m a year across 73,000 customers.

KRS said the best rates on a £39,748 fund for a healthy 65-year-old are about £2,249 a year while the lowest rates are £1,846 – a difference of 18%.

For someone with lung cancer the rates can be as high as £3,926 and as low as £2,680 – a difference of 46%.

The firm explained annuity services which do not cover the whole of the market – including the best deals for those in ill-health – will be able to offer a better deal, but not necessarily the best.

It could result in retirees doing the right thing by shopping around but still ending up worse off than they should be.

KRS group director Dean Mirfin said: “With more pensioners expected to shop around this year than ever before, it is vital that pensioners secure the best possible rate on their retirement funds. It is simply wrong that many are stopping short and accepting what may be a better rate but not best.

“While those providers who do not appear on some annuity broker’s panels, it can be argued, would only be best for a percentage of customers, those who miss out deserve more.

“Better is not good enough when people are making decisions they have to live with – missing out on an extra £457 a year can add up to more than £11,000 lost if you live 25 years after retiring.”

Earlier this year the Association of British Insurers agreed a code of conduct for annuity providers and launched comparison tables for annuities aimed at encouraging more pensioners to shop around rather than accepting the rate offered by their pension provider.

Mirfin added: “The ABI Code of Conduct and comparison tables are making a big difference but when there are services claiming to help people shop around which do not deliver the best deals some pensioners are going to suffer.”

The following providers must be included in any list to provide a whole of market service: Aegon, Aviva, Canada Life, Hodge Lifetime, Just Retirement, Legal & General, LV=, MGM, Partnership, Prudential, Reliance Mutual, Scottish Widows and Standard Life.