The Financial Conduct Authority (FCA) has concluded that competition in the pensions industry isn’t working well enough, and annuity providers have been leaving their customers short changed.
We’ve said before that turning your life savings into a retirement income is a decision you literally cannot afford to get wrong. And now the FCA has published the findings from its review into annuity sales practices, concluding that you must be given much better information before you make big decisions about your income at retirement.
People have repeatedly been let down by the pensions industry, so it’s good to see the regulator working with the industry to clean up mistakes from the past.
The FCA’s proposals include requiring firms to make it clear how the quote you’re given compares to those from other providers. It’s also recommended that a ‘pensions dashboard’ be created to allow you to see all your lifetime pension savings in one place – something we’ve been talking to officials about.
Have I lost out on my annuity?
However, the regulator has also confirmed existing failings in the annuity market. In simple terms, if you’re looking to buy an annuity you should be encouraged to shop around for the best deal. The FCA found that many pension firms have not been telling their customers this over the phone, estimating that people miss out on £67 a year by not shopping around.
The problem is compounded in the area of enhanced annuities, which pay higher incomes to people in ill health. The FCA has said that people who qualified for an enhanced annuity but didn’t buy one have missed out on £175 a year.
The regulator’s proposals are sensible, but action is long overdue and change needs to happen quickly to ensure you get true value for money from retirement products.
Can I get compensation?
The FCA is now demanding that annuity companies provide it with more information on sales of annuities from 2008 onwards, with the potential that fines and compensation could be paid to those who received a poor deal. If you’re worried you’ve missed out because you weren’t told about enhanced annuities or encouraged to shop around, we’d love to hear from you.
Did you have all the information you needed when you shopped for an annuity? Were you encouraged to shop around for the best deal?
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