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FCA to prompt annuity shopping around

Tom McPhail | 23 November 2016 | A A A

You’re about to read press releases, which we’ve written for media use only. They’re not intended for individual investors. They’re not personal advice and don’t include any recommendations.

No recommendation

You’re about to read press releases, which we’ve written for media use only. They’re not intended for individual investors. They’re not personal advice and don’t include any recommendations.

Media contact:

Tom McPhail

Head of retirement policy

Direct Line: 0117 988 9949

Mobile: 07957273627

E-mail: tom.mcphail@hl.co.uk

The FCA has today published a consultation on prompting shopping around on annuity purchase. They propose to require providers to give their customer a comparison quote, showing them how much more they could get if they purchased an annuity on the open market. You can read the consultation paper here.

Tom McPhail, Head of retirement policy:

"The problem of making it easy for investors to understand the benefit of shopping around and to then act on that knowledge, has vexed policymakers for years. This proposal, to give annuity purchasers a pounds and pence disclosure of how much better off they could be will solve half the problem. The bit still to be dealt with is the fact that 75% of annuity purchasers could get an enhanced annuity and that won’t be reflected in this proposed disclosure. The good news is that the FCA knows is and will soon be taking steps to address that too, through revisions to the pre-retirement ‘wake-up’ packs."

Financial Conduct Authority November 2016:

Implementing information prompts in the annuity market CP16/37

3.6 We propose to require firms to deliver the information prompt in this personalised annual form.

The proposed change to our rules therefore requires firms to include the following content, in a format prescribed by our rules:

  • the net annuity purchase amount (the pension fund that will be used to purchase the proposed annuity) used to purchase the proposed annuity,
  • whether the annuity is single life or joint life,
  • whether payment is in advance or in arrears of the start date,
  • whether the rate of income paid by the annuity is guaranteed for any period,
  • whether payment is in advance or in arrears of the start date,
  • whether the rate of income paid by the annuity is guaranteed for any period,
  • whether the annuity income paid will increase in line with inflation or some other specified rate,
  • the provider’s own quote, and
  • how to shop around (the phone number and URL for the Money Advice Service).

You’re about to read press releases, which we’ve written for media use only. They’re not intended for individual investors. They’re not personal advice and don’t include any recommendations.