Do the recent FCA findings on the sale of annuities reveal yet another shocking scandal of rip off pensioners?! Is this the next mis-selling scandal?
The Financial Conduct Authority (FCA) has the duty to promote competition in the interests of customers in the financial markets. One of the biggest financial investments anyone makes concerns pensions and annuities. The FCA has recently carried out a review of the market of pension annuities. Annuities make up a large proportion of the pension market. In 2012, 420,000 annuities were sold to a value of £14billion.
Most people purchase an annuity when they come to retirement (rather than the alternative of an income drawdown), but many chose to stick to their pension provider instead of shopping around. This means that annuity providers are benefitting by up to £230 million every year as 80% or people stick with the same company. Up to 20% more could be gained by shopping around.
