FCA Says Annuity Market Is 'Disorderly'

Watchdog To Assess Competition Report Within 12 Months

14.02.2014

David Shirt, Press Officer | 0161 838 3094

The Financial Conduct Authority (FCA) has described the annuities market in the UK as ‘disorderly’ in a report published today.

The City watchdog has said income from an annuity could increase by 6.8% if people shopped around when they retire.

It found that six out of 10 retirees bought an annuity from the provider which they used when saving for a pension. The FCA revealed that, although many did look at other annuities, a lot of people still did not switch.

80% of those who did not switch could have got a better deal, and a more generous retirement income, by shopping around effectively and then buying the annuity from another provider.

The FCA, which assessed 25 pensions firms for the study, say that they will now conduct a study to assess competition in the market. This is expected to be published within 12 months.

Expert Opinion
The results of this study are perhaps not too surprising and it is clear that some action is required.

“Employers are investing a lot of time and money with auto-enrolment compliance for their employees and that the fact the FCA is going to take another year to consider what changes are needed to the annuity market is disappointing.

“The pension industry has again been found wanting following delays in action in relation to defined contribution charging and in my opinion, it is important that the next report on competitiveness in the annuity market is published sooner rather than later.”
Nigel Bolton, Partner