Tom Selby, senior analyst at AJ Bell, comments:
“Millions of savers have already lost out on thousands of pounds in retirement income by failing to shop around for the best annuity rate but the level of shopping around remains persistently low. Furthermore, the decision by several major providers to pull out of the open annuity market since the pension freedoms were announced in 2014 raises serious concerns about a lack of competition and the impact this could have on the rates offered to savers.
“Arming people with information about annuity deals available elsewhere should help redress the competitive balance in the annuity market and hold insurers’ feet to the fire when it comes to pricing. The effectiveness of this measure will depend on the extent to which consumers actually read and react to the information provided, so policymakers must closely monitor how shopping around figures change following its implementation.
“The drawdown market is hugely competitive, with firms aggressively competing for new business and consumers able to switch providers easily if they can get a better deal elsewhere. It’s vital for savers that the benefits of competition are also harnessed in the annuity market so this is a welcome move by the FCA.”
The full consultation paper can be found here: https://www.fca.org.uk/publications/consultation-papers/implementing-information-prompts-annuity-market-cp16-37