8 in 10 pensioners 'could have had better annuity'

The Financial Conduct Authority (FCA) found that in around eight out of 10 cases where people have stuck with their existing pension provider to buy an annuity, they could have been better off financially by shopping around and switching.

Calls for immediate action to halt 'annuity scandal'

The FCA's report into the annuity market will be published within the next 12 months, and may include rule changes and new regulations.

Read: What are annuities?

Ros Altmann, an independent expert and former Downing Street adviser, said more action should be taken now to halt the "scandal" that is depriving many of a fair income in their retirement.

The reason why immediate action is so important is that this market affects so many people and the transactions they are making are irreversible.

More than 1,000 people every week are buying annuities and the market is worth £14 billion each year.

Read: Watchdog to investigate 'disorderly' pension market

What are annuities?

Financial regulator the FCA is to conduct a major probe into Britain's annuity market, amid claims the "disorderly" state of the sector is ripping pensions off.

  • Annuities are a one-off purchase that people make when they retire, which converts their pension savings pot into a fixed annual income for the rest of their lives.
  • An array of different annuity types exist, including standard ones that most people tend to get and enhanced annuities, where people in ill health, can get higher payments.

Read: Watchdog to investigate 'disorderly' pension market

Advertisement

Watchdog to investigate 'disorderly' pension market

Pension providers are to be investigated over claims that the UK's "disorderly" annuity market is depriving pensioners of a fair retirement income.

The FCA is to investigate claims the 'disorderly' annuity market is depriving pensioners. Credit: Press Association.

The Financial Conduct Authority (FCA) found that in around eight out of 10 cases where people have stuck with their existing pension provider to buy an annuity, they could have been better off financially by shopping around and switching.

It found that currently, around 60% of people stick with their provider, when in fact had they shopped around they would have saved a extra £1,500 into their pension.

More: Labour promises pensions advice that will 'save £1bn a year'