(Bloomberg) — U.K. pension providers must improve annuity sale practices and make clear to consumers how their quotations compare with other firms so retirees can pick the best deal, the Financial Conduct Authority said today.
The FCA also recommends a “pensions dashboard” be developed to allow customers to view their retirement savings in one place, according to a statement. The regulator is seeking feedback on its retirement income study and will decide at a later date if rule changes are needed.
“We want to see firms improving the way they communicate with their customers,” said Christopher Woolard, the FCA’s director of policy, risk and research. “Competition is not working as well as it could for consumers, with many continuing to miss out on a higher income by not shopping around.”
In March, Chancellor of the Exchequer George Osborne scrapped rules requiring retirees to buy annuities with their pension funds, allowing retirees to access their pensions as a lump sum without paying a 55 percent tax. Insurers were using the products to boost earnings and shares plunged after the decision.
Enhanced annuities, which offer a higher income for people with medical conditions that shorten their life expectancy, are a particular area of concern because customers are often not encouraged to compare products, the London-based FCA said. Some companies are also failing to tell clients other providers may offer enhanced annuities that they do not.