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Campaign for fair USP deal

Annuity Direct is running a Fair USP campaign, calling on the FSA to ensure providers give consumers full details of critical yields on unsecured pensions, based on the best annuity rates on the open market.

Annuity Direct chief executive Bob Bullivant says some insurers’ critical-yield calculations are misleading because they use their own annuity rates. The firm wants rules to ensure clients entering into a USP automatically receive a whole of market guaranteed annuity quote which takes account of any medical condition.

It wants the best rate, or guaranteed rates, used to calculate the critical yield. It adds that the critical yield generated must always be quoted to clients and recalculated at each review.

Bullivant says the Government’s proposal to scrap compulsory annuitisation at 75 could see more people choosing to take unsecured pensions, so people must have accurate information.

He says: “Insurers are understating the yield required, and therefore the investment risk required, to match annuity rates. People could lose out as the returns may not match what they could have bought with an annuity.”

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