Julian Knight: Clear message to insurance industry - offer a better deal
Wednesday 30 January 2013
After buying your home, an annuity is probably your biggest financial purchase, but few of us take more than a few minutes to sign on the dotted line when it comes to retirement.
This isn't because we don't care – terrible annuity rates are a recurring concern in my weekly mailbag from readers – it's because the insurance industry has for decades been hoodwinking savers into not shopping around and merely signing up to the annuity offered by their insurance company, which is almost always a poor deal. This in particularly affects the ill and those who have a shortened life expectancy, many of whom are unaware that by shopping around and buying an enhanced annuity they could enjoy a far higher income than at present.
The FSA's investigation is a clear shot across the bows of the insurance industry, telling it the old practices of keeping secret the annuity rates they offer and using sophisticated marketing techniques to get six out of ten pension savers to sign up automatically to often poor rates have to come to an end.
The insurance industry says that it is putting things right, and points to a new code of conduct that is due to come into force in a few weeks' time. But the public, politicians and, it seems, the FSA are deeply unconvinced.
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