Retirees are missing out on thousands of pounds of retirement income, despite rules designed to encourage people to shop around and switch provider.
Figures from the Financial Conduct Authority revealed that 53% of Guaranteed Income for Life (GIfL) plans purchased in 2020/21 were sold by pension companies to their existing customers. This is despite new rules introduced in 2019 which require pension providers to show customers how its own GIfL quote compares with the best on the market.
Stephen Lowe, group communications director at Just Group, called upon providers to do more to help their customers.
Lowe said: “The new rules won’t work unless providers help their customers to secure the extra income. Providers who do the minimum are more likely to keep the customer’s business and the FCA’s figures show the numbers switching has barely improved.”
Analysis shows that a 65 year old in reasonable health with an average GIfL purchase of £68,000 would miss out on £490 a year extra income by accepting the lowest offer compared to the best offer – equal to £12,250 over 25 years.
Lowe said: “Customer decisions are heavily influenced by the level of support they are offered. Forward-thinking providers are actively helping their customers by providing modern broking services that make it easy for their customers to compare and switch. Many providers are still dragging their feet, knowing if their customers don’t get that level of support they are more likely to stay put and accept less competitive offers.”
Just Group said customers should check if their provider offers a broking service and if not, consider how much that extra income would amount to over a 20 to 30 year retirement period.
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