Commenting today (Tuesday) on the Financial Services Consumer Panel’s (FSCP) report on annuities, Helen Forrest, Head of Policy, NAPF, said:
“The NAPF has long been very concerned about the annuities market.
“We published a joint report with the Pensions Institute in February 2012, which found that millions of people saving in defined contribution (DC) pensions for their retirement are stuck having to navigate through an unfair and opaque annuity system. This system lops off up to £1bn pension incomes every year as people buy annuities that do not match their circumstances. It also uncovered evidence of murky pricing in the annuity market, putting unsuspecting consumers at a huge disadvantage.
“We welcome the FSCP’s report on the annuities market. The issues it highlights are particularly important, given that an annuity purchase is irreversible and determines a person’s income for the whole of their retired life – which could be 30 years or longer. The FCA’s current thematic review should shed more light on the issues and we believe that strong and immediate recommendations are required to support savers.
“Automatic-enrolment will see 5-9m people joining workplace pensions. To maintain confidence in the pensions market and to ensure savers understand the options available to them and make sensible choices, it’s crucial that savers receive help from an independent source that meets agreed quality standards for advice.”
The NAPF’s 2013 Annual Survey of pension schemes, published last week, found that three quarters (75%) of respondents informed savers about the open market option for annuities, while 60% encouraged members to obtain independent financial advice. Schemes and employers appear to be more proactive in helping their members make good choices at retirement.
In June the NAPF published a report, Supporting DC savers at retirement: an analysis of the advice and brokerage market. It highlighted the barriers preventing schemes from providing advice and brokerage services for their members at retirement. These barriers put savers at greater risk of retiring with a poorer annuity deal. The report called for more support for DC schemes and savers, especially those that may be commercially unattractive to annuity advisers and brokers.
Notes to editors:
1. The NAPF is the leading voice of workplace pensions in the UK. We speak for 1,300 pension schemes with some 16 million members and assets of around £900 billion. NAPF members also include over 400 businesses providing essential services to the pensions sector.
2. A copy of the NAPF and Pensions Institute Report ‘Treating DC scheme members fairly in retirement?’ published in February 2012 can be found here.
3. A copy of the NAPF report ‘Supporting DC savers at retirement: an analysis of the advice and brokerage market’ published in June 2013 can be found here.
Lucy Grubb, Head of Media and PR, 020 7601 1726 or 07713 073023, [email protected]
Aimee Savage Richards, Press Officer (interim), 020 7601 1718 or 07825 171 446, [email protected]