Business

Reform of unfair pensions 'drifting'

pensioners on bench Image copyright Thinkstock
Image caption Pensioners could increase their income if they shopped around for an annuity

The City regulator says it wants retired people to be able to shop around for a retirement income, but reform is not coming fast enough.

The Financial Conduct Authority (FCA) believes that pension providers are failing customers.

Its final report into annuities confirms previous recommendations that customers should be told of better value policies available elsewhere.

But one retirement analyst said the pace of change was "drifting along".

The FCA has confirmed plans for:

  • Annuity quotation ranking - allowing customers to compare their retirement income prospects with other policies elsewhere
  • Clearer information packs outlining the options for people approaching retirement
  • Long-term development of a "pensions dashboard" so people can see all their potential retirement income, from pension pots to the state pension, in one place

But Malcolm McLean, consultant at Barnett Waddingham, said the market was clearly in need of change and the reforms were too slow.

"The FCA plans to consider all this further and to run another customer survey as part of a wider review of its rules in the pension and retirement area later in the summer," he said.

"It will probably be another year at least before the remedies kick in, making it eight years since the regulatory probe of the market began."

Adrian Walker, head of retirement planning at Old Mutual Wealth, said: "Consumer understanding of pensions is still low. Any measures to improve this are welcome."

A major overhaul that will allow people to cash in their defined contribution pension pot, rather than buy an annuity, will come into force on 6 April.

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