The Future of Retirement Income

  • Following the biggest changes to the pensions market for decades – and the resulting dramatic changes to the annuities market – it is vital the regulator, providers and the Government ensure both existing alternatives to annuities and new products that are being developed offer consumers value for money.
  • We believe this is a golden opportunity to ensure more employers have a role in helping consumers make decisions about the best retirement options for them, just as many employers now help people save for retirement through auto-enrolment.
  • The pensions industry should work with all players towards replacing the sales-driven annuity market with better products and an institutionalised approach to reduce the risk to individuals, so that consumers are seamlessly supported from paying money in to a pension, to taking money out. 
  • The Financial Conduct Authority (FCA) must proactively monitor the new products coming into the market and revise its rules around the sale of products to prevent people being sold one that is unsuitable. 
  • The Government needs to ensure there is strong governance in place so providers act in consumers’ best interests, work closely with the FCA to monitor products, and help consumers make complex choices when previously they’ve been directed to a default option. The Government must also ensure that the guidance guarantee for people approaching retirement is delivered genuinely independently of providers, is high quality, personalised and one-to-one. 

Which? executive director, Richard Lloyd, said:

“Too many consumers have received a raw deal from annuities in the past. So while the new flexibilities offered by the Government’s reforms are welcome, the focus must now be on making sure not only that genuinely independent guidance is available but also that the new retirement income market is not as dysfunctional as the one it replaces.

“It is of paramount importance that the Government, industry and regulators work together now to put in place a consumer-friendly system that builds on the benefits of auto-enrolment and ensures that people get a good deal throughout their retirement.”

To view a copy of the full report visit the downloads section.

Press Release