Advisers are divided over Tesco’s decision to include annuities in its comparison service, with some fearing consumers may not choose the best annuity for their needs.
This week, Tesco confirmed that subject to regulatory approval it would include annuities in 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 purchase an annuity that is not the best option or that the 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 personal and state pensions.”
AWD Chase de Vere head of communications Patrick Connolly says: “People may end up taking an annuity when it is not the best option for them. They may not be aware that a joint or 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 and those with a little bit more money will realise it is a good idea to go one step further and take advice.”