Consumers losing out on pensions, experts warn

The current pensions system is failing the consumer, according to experts, after a report suggested millions of older people are losing out because of the poor value and sharp practices of life insurers which sell annuities.

“More than a thousand people a day are buying annuities and risk getting very poor value pensions, which they will be stuck with for the rest of their lives,” said Ros Altmann, a former pensions adviser to the Treasury. “As we are automatically enrolling millions more people into workplace schemes, it is essential to ensure good value pensions at the end of the process.”

The report from the Financial Services Consumer Panel, published today, warned firms are confusing customers while charging high commissions. It has recommended a study is launched into the £12 billion annuity industry.

Nick Flynn, longevity expert at LEBC Group, said: “Annuities and retirement advice should be treated in the same way as ISA, bonds, pensions etc. This means no commission and advice should be provided.”

Tom McPhail, pensions chief at Hargreaves Lansdown, added: “It is absolutely vital that shopping around at retirement should be the default for everyone.”