FCA: Shopping around failure at heart of 'disorderly' annuity market

Some 80% of retirees who stick with their pension provider when they buy an annuity could get a better deal elsewhere, pointing to a huge failure in the open market option, the Financial Conduct Authority (FCA) has found.

The regulator's thematic review into the annuity market found eight out of ten people could get a more generous rate if they shopped around and bought an annuity from a different provider. This equates to having an extra £1,500 saved into a pension just before retirement, it said. The FCA found that for a pension pot of £17,700 (the average size in this review), buying an annuity from the existing pension provider would return an average annual income of £1,030. However, by shopping around and switching provider, that annual income would increase by 6.8%, or £71, to £1,101. It s...