The
pensions industry is calling on the government to make sure that
annuities are sold in a fairer way and customers can easily shop around
for the best deal. Find out more here.
By Iona Bain
A damning
report about 'toxic' annuities and the way they are sold to retirees has
revived calls to reform the pensions industry.
Experts have
agreed that a "hugely unfair and opaque" system is losing pensioners
thousands of pounds when they come to buy their annuities, and that the
recent findings of the National Association of Pension Funds (NAPF) and
the Pensions Institute (PI) should be taken seriously by the government.
Craig
Fazzini-Jones at MGM Advantage, one of Britain's major pension
providers, says it is vital for the industry to "unlock consumer
inertia" over important annuity decisions.
He says:
"What is very evident is that those customers who have access to
professional financial advice do shop around and secure the best product
and rate for their individual circumstances.
"By taking some simple steps, we can ensure many more people would benefit from better products and annuity rates than today."
Tom McPhail
at Hargreaves Lansdown, one of Britain's biggest annuity brokers, says
that the industry and the government have "demonstrably failed" to
ensure that investors can easily shop around.
He adds:
"Even today it is proving a struggle to push insurance companies and
pension schemes into giving their customers a fair deal."
The
government is "likely" to develop a code of practice for the industry
but it should move to legislate if this doesn't improve the transparency
of the annuity market, he states.
Mr McPhail
continues: "The government and the regulator should make it their
business to monitor insurers’ sales processes. The insurers know whether
the customer is getting a good deal or not, whilst very often the
customer has no idea whether they are being ripped off or not."
