Annuity providers face best-price comparison rule - City watchdog.

Annuity providers face best-price comparison rule - City watchdog.

Retired people looking to buy an annuity are to get more help in securing the best deal, under plans announced by the Financial Conduct Authority (FCA).

The City Watchdog said it wanted to introduce an 'annuity comparator' - aimed at boosting competition by forcing firms to show customers exactly how much they could save by shopping around before buying a deal.

Under the proposals, the difference between the company's quote and the highest quote available in the market would have to be divulged - alongside a link, email address or contact number to help the customer access the 'best' offer.

Annuities give people a set income when they retire, usually for the rest of their life, but they have been controversial due to disappointing rates and concerns that a majority (60%) of users are not shopping around.

Despite criticism over low incomes, the products are seen as offering more peace of mind to pensioners because annuities act as a guarantee that someone will not outlive their savings.

The pension freedoms launched last year mean people are no longer required to buy an annuity with their pension pot. It led to some major players pulling out of the market.

Controversial plans to let pensioners sell their retirement annuities to insurance firms for a cash lump sum were scrapped by the Government last month on fears they would deliver poor value for money.

The FCA's executive director of strategy and competition, Christopher Woolard, said: "Although sales have declined since the pension freedoms were introduced, annuities still play a significant role in retirement provision.

"It's important that consumers shop around to get the best deal for them - yet our previous work found that very few people actually did so."

:: Nearly 14 million face retirement shortfall 

The move was widely welcomed by industry and consumer representatives.

Rob Yuille, head of retirement policy at the Association of British Insurers, said: "The pension freedoms have given savers a far wider range of options than ever before, and providers fully support efforts to encourage savers to shop around."

Richard Eagling, head of pensions at Moneyfacts, said: "The potential benefits of this new rule to a retiree's income could be highly significant, given that the difference in annual annuity income between the highest and lowest open market annuity rates on offer is currently 12%." 

Sky News.

Culled from Yahoo News.