The Financial Conduct Authority (FCA) has this week published a review suggesting some pension providers are failing their customers.
In the review of the pensions market, the FCA found that many people with reduced life expectancy - those with major medical conditions - were not being told about enhanced pension policies they might eligible for.
“It’s incredibly important to look at all options when considering a pension,” says Rob Dolbear, managing director of relocation specialist, HCR.
“Enhanced annuities exist so that those anticipating a shorter retirement can gain a higher income from their pension. Providers should be highlighting the fact that some people could benefit from a better deal elsewhere - and the FCA says this does not appear to be the case.”
The review recommends providers should be made to tell customers to ask for quotes from other pension companies - and it also maintains that buying an annuity is a viable option for many.
“Annuities - income for life - have reduced in popularity since the UK Government’s announcements on pension reform but I agree with the FCA that they still offer ‘good value for money’ and stability for those with average-sized pension pots.
“Drawing down on your pension brings with it significant risk - and it’s incredibly important for those considering such a move to seek expert advice before doing so,” adds Rob.
“I think there is also a vital role for employers - to ensure workers have access to sound financial advice when it comes to saving for retirement. This is particularly important over the coming years, when workplace pensions become compulsory whatever the size of your business.
“For those in work, private pensions are a crucial aspect of retirement because reliance on the state is set to become less and less commonplace. Planning for the future - no matter how far in the distance it might seem - is essential. There’s no time like the present.”