The FCA has announced proposals with the aim of ensuring that consumers are better aware of the potential for an enhanced annuity. Retirement Line welcomes the move, but believes that consumers could still be in the dark about their full income potential.
The FCA’s concern expressed in its Retirement Outcomes Review¹ is that, at decumulation, individuals are provided with a quote based only on information that the pension scheme has about them. Although most retirees may be eligible for an enhanced annuity, the pension provider is usually unaware of a customer’s health and therefore cannot provide an accurate quote.
Looking at some of the FCA’s comments makes interesting reading:
“At the point that a consumer is considering purchasing an annuity we want to ensure that consumers are aware of their eligibility for an enhanced annuity. Following feedback to the Interim Report, we propose to require providers to ask consumers questions on health and lifestyle factors to assess their eligibility for an enhanced annuity. Providers will then present their quote alongside the highest quote available on the open market for an enhanced annuity, where eligible.”
Although Retirement Line welcomes anything that would increase consumer awareness of enhanced annuities, we are concerned about a possible lack of consistency in the method used to calculate an enhanced quote.
We believe that Retirement Line is especially successful in securing the best enhanced annuity rates due to our large team of experienced Annuity Specialists asking the right searching questions about our clients’ health and lifestyle. This is made possible due to our ongoing investment in underwriting training for our Annuity Specialists.
We know from long experience of comparing our enhanced rates with providers and IFAs that they don’t necessarily have our capability to generate ‘the highest quote available on the open market’ which concerns the FCA. The worst scenario is that a retiree could be sent what purports to be the best enhanced quote, where in fact it could be anything but.