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Advisers divided over Tesco annuity comparison move

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Advisers are divided over Tesco’s announcement that it will include annuities in its comparison service, with some fearing consumers may not choose the best annuity for their needs. 

Tesco today confirmed it will start introducing customers to UK annuity products through its Tesco Compare service, which is currently used for car and home insurance quotes and deals on household bills.

Some advisers say there is a danger people will be pushed towards an annuity when it is not their best option or that the Tesco comparison service will not account for those with complex needs.

Norwest Consultants principal Harry Katz says: “I think Tesco should be putting an upper limit on the size of pension pot they will deal with because once your pot gets to a certain size you would generally need to take advice to make sure you get the best retirement income.

“There are also other things to consider such as whether to take a joint or single annuity and the synergy between their personal and state pensions.”

AWD Chase de Vere head of communications Patrick Connolly says: “The problem is people may end up taking an annuity when it is not the best option for them. They may not be aware that a joint annuity or an enhanced annuity is the best option for them.”

Other advisers say the move will make more people aware of the benefits of shopping around for an annuity.

Hargreaves Lansdown head of pension research Tom McPhail says: “This is great news. We have been campaigning for shopping around for some time and there are still a lot of people not doing it, so anything making people actively look around for the best rate for themselves and their family is going to have a positive impact.”

Radcliffe & Newlands chartered financial planners Mel Kenny says: “This will create even greater awareness of the ability to shop around for an annuity income and those with a little bit more money will realise it is a good idea to go one step further and take advice.”

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. Let’s face it. Anyone likely to be using Tesco.com to purchase an annuity is unlikely to be a potential IFA client.

    Therefore, if the site stops customers from buying the annuity option presented to them by their existing pension provider, then this would be a big step forward.

  2. When you consider how many people taking retirement simply accept what on offer from their pension provider, then it’s an improvement. Those who take their advice “down the pub” or at “Tesco” don’t deserve any better.

  3. Not needed, simply raise the trivial pension limit to 3% or even 4% of the LTA, the govt still gets its tax. no need for advice then on small pots.

  4. If Tesco can make it work them all is good. I think that people need choice and it is reality that a lot of people thik they can DIY it and will do so. That is always going to be the case. Are they going to offer advice? I doubt it. Are they likely to get the shopper a better deal than their current pension provider? Probably. Is that good outcome al round? Yes. Would any IFA be able to afford to provide the advice required for that shopper at a price that is commercially viable AND at a price they are willing or able to pay? Probably not so for that part of the market it is excellent news. Non advised prodcut sales are always going to be controversial and as a result there will always be some bad decisions but most who use this will get better rates in most cases so good on Tesco for trying. As they say, every little helps

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