Buying annuities: pensioners are missing out so the FCA is stepping in

“Shop around.”

Two words that will ring true to anyone that hears them but which are so often ignored when the time to make a purchase actually arrives.

The FCA (Financial Conduct Authority) has stated that as many as three out of every four pensioners buying an annuity may not be getting the best deal for themselves.

Brand loyalty, convenience, understanding the marketplace – there are lots of reasons people might not shop around when buying an annuity, but where your own financial future is concerned we are 100% adamant that it’s worth the time and effort to review the deal in front of you and then consider the alternatives.

Even a few pounds here or there can add up to a considerable difference, especially if the pension annuity is to become your sole source of income.

As such, the FCA has introduced new rules so that, as of September 2017, all insurers offering annuities will have to list competitors’ prices and even a link to a price comparison website.

“Although sales have declined since the pension freedoms were introduced, annuities still play a significant role in retirement provision,” commented Christopher Woolard, Executive Director of Strategy and Competition at the FCA. “We believe that the proposals we have outlined today will engage consumers and allow them to make better decisions, increasing shopping around and competition across the market.”

But as far as we’re concerned, even price comparison websites don’t tell the whole story. What kind or size of annuity to buy – or whether to buy one at all – is the bigger question and that’s why it’s best to rely on specialists like DPT Financial Services to talk you through the many options now available to pension holders.

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