Britain's pensions system failing consumers, experts warn
The current pensions system is failing the consumer, according to pension experts.
They were responding this morning to a report published yesterday by the Financial Services Consumer Panel which suggested millions of older people lose out because of the excessive profits, poor value, consumer detriment and sharp practices of life insurers which sell annuities.
"More than one thousand people a day are buying annuities and risk getting very poor value pensions, which they will be stuck with for the rest of their life, said Ros Altmann, a former pensioners adviser to the Treasury.
"As we are automatically enrolling millions more people into workplace pension schemes, it is essential to ensure good value pensions at the end of the process."
The £12bn annuity industry has come under repeated criticism this year.
In January the City Watchdog the Financial Services Authority launched an in-depth review into annuities to examine the detriment faced by consumer who do not shop around for an annuity.
In March the Association of British Insurers - which represents the big life and pension giants – agreed new rules earlier that force pension providers to issue an information pack to customers before offering them an annuity.
But the argument rumbled on today. Nick Flynn, longevity expert at LEBC Group,said: “Annuities and retirement advice should be treated in the same way as ISA, bonds, pensions etc. This means no commission and advice should be provided."
Tom McPhail, pensions chief at Hargreaves Lansdown, added: "It is absolutely vital that shopping around at retirement, both for the right kind of retirement income and then for the best rate, should be the default for everyone."
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