Retirement Line has welcomed news that annuity providers will be required to inform customers how much they could gain by shopping around elsewhere, under plans announced by the Financial Conduct Authority (FCA).
The company, the UK's largest broker specialising in annuities alone (by turnover), said: “the crackdown means that many more savers will be made aware of the importance of shopping around for a better annuity deal, something we are dedicated to communicating to customers.”
Savers could be £37,780 better off
Figures have revealed that 60 per cent of customers do not switch providers when they purchase an annuity, despite the fact that up to 80% of these customers could get a better deal on the open market*.
Today, a 65-year-old buying a standard lifetime annuity from his existing provider (a leading insurance company) could be potentially £37,780 better off over the next 20 years of their retirement by shopping around, according to Retirement Line’s own data.
The figures are based on a 65 year old retiree with a £100,000 fund accepting the annuity rate offered by a leading insurer, paying him just £4,277 a year for life.
If he shopped around for a better deal, however, and qualified for an enhanced annuity based on poor health – a history of smoking perhaps, or high blood pressure – then he could switch providers to purchase an annuity paying him £6,166 every year.
That is £1,889 more income every single year for life, and for very little time or effort on the retiree’s part.
David Slater, CEO of Retirement Line said:
“The crackdown is great news for the industry and has been a long time coming. We are dedicated to finding savers a larger income for their fund and hope these new rules will encourage more people to search for a better deal rather than accepting the annuity offered by their existing provider.”
“Of course, it is also important that customers understand that by using the services of an annuity specialist like Retirement Line, we can help identify hidden penalties in their policy or any safeguarded benefits which might exceed what they could achieve on the open market. It is therefore vital the guidance of a specialist is sought before any decision is made.”
“With a greater focus being put on finding a more competitive deal to secure a higher income for life, specialists like Retirement Line will be instrumental in achieving this for retirees.”