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Pension providers criticised for confusing retirees


Some insurance and pension providers have been criticised by the Financial Services Consumer Panel (FSCP) for confusing consumers and charging over the top commissions on annuities when they retire.

An annuity is essentially a guaranteed, permanent income from pension savings, meaning that retirees are guaranteed never to allow their pension savings to dwindle to nothing, no matter how long they live. However, the FSCP has warned that “many examples of poor practice mean that the general outcome for consumers can be akin to a lottery," and that many consumers are entering into these deals without seeking proper financial advice.

There are roughly 400,000 annuity plans sold each year, with these sales expected to double over the next few years. It would seem that it is for this reason that the FSCP has seen appropriate to raise issues regarding the sales of these plans.

The FSCP has further recommended an examination of the market to look for “exploitative” pricing of annuities sold by insurance companies specifically to customers who have saved with them for their pension, whilst it has further expressed a need to look at hidden charges that affect a consumer’s ability to make an informed decision.

Chair of the FSCP, Sue Lewis concluded their view by stating "We urgently need to reform this market, particularly for those with smaller pension pots, who usually can't get independent advice."

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