Hundreds of thousands of pensioners are losing out because they were not told to shop around for the best annuity, a former Downing Street adviser claims.
Ros Altmann – who helped spearhead the Pensions Action Group’s campaign for scheme wind-up victims – said hundreds of thousands of people bought an annuity every year without having a clue about what they were doing.
Altmann said that in 2002 there was tremendous support in the pensions industry on the annuity consultation.
But she added: "Now six years down the line, when approximately 400,000 people will buy an annuity this year, the government still knows many of them are doing the wrong thing and is doing nothing about it."
The Association of British Insurers admitted that communication from annuity providers needed to be clearer.
A spokesman said: "The standard of communication sent out to customers has been of mixed quality. That’s why we’re doing all the work we’re doing to make things much clearer."
Altmann added: "For the ABI to say they have been making things clearer for consumers is simply laughable.
"All it takes is a standard form, with standard wording in ‘English’, that people buying their pension will have a hope of understanding and a requirement on the provider to treat the customer fairly."
Altmann hopes the Financial Services Authority – under new chairman Lord Turner – will see the issue as "an absolutely easy win for the consumer" which can get people better retirement income.
She added: "This will come at no cost to the government. It’s simply making sure the customer is treated fairly by the provider of the annuity."
© Incisive Media Ltd. 2008
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