PENSIONERS are failing to shop around for the best annuities deal and so are missing out on income in their retirement, the City watchdog found in a report published yesterday.
Annuities themselves could offer good value to consumers, the Financial Conduct Authority (FCA) said, as long as they sought out a good deal.
To rectify this problem, annuity providers will have to publish information showing customers how their quote compares with others in the market. In the longer term, the FCA wants a more comprehensive “pensions dashboard” to show retirees all their options.
“The budget reforms are a game changer for the retirement income market. People will be given more choice and many will want some support to ensure they make the right decisions for them,” said the FCA’s Christopher Woolard. “In order for the pension reforms to work and for people to have trust and confidence in the products they are buying firms need to act now.”
But pensions campaigner Ros Altmann said this will not stop the worst behaviour. “Call centres were not explaining properly about how to benefit from better rates if you had health issues or how much annuity rates can vary if you shop around,” she said. “This is surely mis-selling, yet there seem to be no proposals for compensation.”