The startling headline finding from The Financial Conduct Authority’s (FCA) recent review of the annuities market proved to be the fact that some 80% of people who purchased an annuity from their pension provider could have received a better deal from an alternative source.
The report found that the annuities market was not working as it could for consumers, with many reporting that they found it difficult to review the suitability of the annuity offered by their pension provider, when compared to the alternatives available.
In monetary terms, the FCA found that, on average, retirees who buy an annuity from their pension provider miss out on around £71 per year. With the average length of retirement being around 19 years, that figure works out to meaning retirees are over £1,300 worse off: a figure that could represent a very nice holiday for many, an investment on behalf of the grandchildren or one of several other very rewarding ways to spend a retirement income.
As part of their findings, the FCA have launched a more in-depth review of competition within the annuities marketplace to assess how it could be better organised with consumers in mind.
The message though is clear: shopping around when purchasing your annuity can really benefit you in your retirement years and, if you find the marketplace too complex to navigate on your own, a financial planner may well be able to assist.
Taking account of your retirement goals and your current financial situation, we’ll look at your various options for living your desired lifestyle in retirement, including whether purchasing an annuity would be a suitable solution and, of course, then assessing which annuity would be best for you.
We’ll also be keeping a close eye on the FCA’s further review of the market, to see how it will impact annuities in the future and how that would work for consumers.