Unfair annuity sales wiping up to 50% off income, says NAPF
Few people knew enough to successfully choose an annuity themselves. For those who were able to shop around may have found the best deals were simply not advertised.
"It is virtually impossible to find a specialist adviser who covers the whole market and who is willing to help those with smaller funds," the NAPF said.
We say two things:
1) Ask us – we can often help and if not will point you in the right direction.
2) We have been warning for a long time that the move towards a fee based service will leave those in the greatest need of advice vulnerable because the cost of compliance has driven up our costs.
Our advisors offer some pro bono hours to cover just this situation.
The way annuities are sold is costing hundreds of thousands of retirees as much as £1bn in future pension income, a report by the National Association of Pension Funds (NAPF) claims.
The NAPF said the problem lay with obstacles that stopped many people shopping around for the best deals.
It also said some insurance firms which sell annuities were guilty of "sharp practice and murky pricing".
"The process for choosing an annuity is a complex one and the majority still go for the "default" option by sticking with their pension scheme provider," the NAPF report said.
"This failure to shop around for a better deal can wipe 30% off their annual pension income, and in some cases up to 50%," it argued.
The NAPF said most people retired with pension pots worth less than £50,000, which was not enough for advisers to make a profit advising on which annuity should be bought.
