Flaws in proposed annuity quote comparison process
26 February 2018
Retirement Advantage has warned that the introduction of annuity quote comparison templates will not help customers because of fundamental flaws in the way the process works.
From 1 March 2018, advisers and providers must include the quote templates showing like-for-like rates when producing annuity illustrations for clients. The rules were designed to encourage improved shopping around rates for consumers looking to buy an annuity.
However, Retirement Advantage said the quotes may be produced on a limited underwritten basis, or only provide standard annuity rates which will not factor in health or lifestyle information.
Andrew Tully, pensions technical director, Retirement Advantage commented: “These changes, although introduced with the best intent, will not improve the outcomes for thousands of people who continue to value the security of a guaranteed lifetime income from an annuity. Significant flaws remain where quotes produced on limited information will not highlight the true value of the annuity, and may well result in people locking into uncompetitive deals.”
Retirement Advantage estimates that 70% of people could qualify for a better income in retirement because of health or lifestyle, yet the majority do not shop around. Over the course of a 20-year retirement, the average annuity will lose £8,460 of income simply because people did not receive the best deal.
According to the firm, seeking professional advice will ensure customers receive the most appropriate annuity, or combination of annuity and drawdown, to suit their particular circumstances, as well as the most competitive rate.
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