With all the talk about the new pension rules coming into force in April 2015, you could be forgiven for thinking that the days of the annuity are over. It is interesting therefore that on 11th December 2014 the regulator, The Financial Conduct Authority released it’s Thematic Review into Annuities sales practice and the interim report on the Retirement Income Market Study.
The reports endorse what we have long been campaigning for: freedom, choice, fairness and better outcomes for UK retirees. To read the report click here.
In 2002, the FSA introduced rules requiring insurers to inform their existing pension customers that they could buy an annuity on the open market and to improve consistency between firms in the way this was done.
In 2008 the FSA conducted a review of the wake-up packs sent by firms to their existing pension customers at the start of the retirement customer journey, measuring firms’ literature against the Open Market Option (OMO) Rules.
That review found some good examples of literature which clearly set out customer’s options, including explaining the potential benefits of exercising the OMO. However, it also found that almost 40% of firms had material for one or more products that failed to meet the requirements.
The FCA states that annuities are an important product for the retirement market and that people with average sized pension pots are well served by the right annuity purchased via the Open Market Option. This is particularly appropriate for clients with a low appetite for risk.
The FCA’s greatest area of concern was where customers were not made aware of enhanced annuities where they estimated that 91% of consumers could get a better deal.
Over the last 10 years, Best Pension Annuity had provided a range or retirement products including guaranteed, secure income, based on individual health, to retirees in the UK and abroad.
Is the annuity dead? Like Mark Twain, we think reports have been greatly exaggerated. And the FCA’s reports prove it.
We sincerely hope it is the beginning of the end for poor customer value, lack of transparency and limited choice for those who haven’t had access to your advice via the Open Market Option.
An annuity is an important consideration for any customer approaching retirement. Even customers who are currently in drawdown can switch into an annuity if they wish.
For help and information please contact Best Pension Annuity on 020 33 55 4827