In response to today’s Budget measures to help savers, Which? executive director Richard Lloyd said:
“The Budget brings a welcome shake up for struggling savers who too often get a raw deal.
“Hiking the ISA limit will encourage more consumers to save, although we also now need to see more competitive interest rates from banks that have slashed these repeatedly in recent years.”
“The overwhelming majority of people who buy an annuity from their existing provider could get a better deal on the open market, so today’s announcement should help stop millions of people from losing out on thousands of pounds of retirement income. The key to making this work will be a requirement on providers to give consumers high quality, impartial advice on their options across the whole of the market, with maximum protection at this critical time in their financial lives.
“Savers will welcome these moves on ISAs and annuities, and we now look to the financial industry to raise their game by offering better value products and genuinely impartial advice, so that millions of consumers get the best possible return on their savings and investments.”
1) Which? research reveals that insurance companies that offer below the market best are essentially taking years off people’s hard earned pension contributions:
|Percentage below market rate||Years lost|
Assuming someone pays into their pension for 40 years, with contributions starting at £1,200 a year and increasing in line with earnings at 4% a year. Returns of 7% a year.
2) FCA figures show 80% of customers who purchase their annuity from their existing provider could get a better deal on the open market.