UK - New FSA proposals on polarisation may unintentionally muddy the waters and leave pensioners worse off, argues retirement specialist The Annuity Bureau.
There are so many companies offering niche annuity products – including those for smokers or life-threatening illnesses – that only true independents can advise on the full range. The difference in income that can result from shopping around the full range of companies for a healthy annuitant can be as much as 20% and far more if they qualify for an impaired life annuity.
The FSA intends to create four categories of adviser, of which only one would be truly independent. Under the new rules, consumers might choose to consult a ‘multi-tied’ agent – with access to a fixed number of companies. However, they may not realise that even the biggest names in the market like Standard Life, Scottish Widows, Friends Provident and Prudential do not offer every annuity option.
This could give retirees the impression that they are ‘shopping around’, while in reality they could be missing out on the best choice for them. This is particularly the case for retirees who would qualify for a higher annuity rate – such as smokers or those with blue-collar jobs living in specific areas of the UK, for example, the north of England.
By Luke Clancy
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