Which? response to the FCA’s review of the annuities market

Responding to the FCA’s review of the annuities market, Which? executive director, Richard Lloyd, said:

“Action is urgently needed in the annuities market to help people get the best possible income in their retirement so we welcome this market investigation. But the regulator must be clear that they will not tolerate providers treating their customers unfairly by offering poor rates and effectively burning years of people’s hard earned pension contributions.

“Rather than profiting from people’s inertia, we want all providers to proactively publish their rates to increase transparency in the market and encourage consumers to shop around.”


Which? wants all annuity providers to:

– Publish their rates. [According to the FCA, 80% of customers who purchase their annuity from their existing provider could get a better deal on the open market]

– Always ask medical questions to help customers understand if they could get a better deal with an enhanced life annuity. [According to the FCA, only 5% of annuities sold by companies to their internal customers are enhanced, compared to 50% of annuities on the open market]

– Make sure people with dependent spouses have considered joint-life annuities.

We also want the Financial Conduct Authority to name the annuity comparison websites where it found misleading financial promotions.

Insurance companies offering below the market best are essentially taking years off people’s hard earned pension contributions:

Percentage below market rate Years lost
20% 11 years
15% 9 years
10% 6 years
7% 4.5 years
5% 3 years

[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.]