Pension experts say the FSA must avoid being “myopic” in its review of the annuity market by focusing solely on the rates offered by providers.
Last week, the regulator set out plans to carry out a two stage investigation into the annuities market to make sure people are getting value for money from pension providers.
The first part of the review will look at annuity pricing and analyse whether there are any specific firms or groups of consumers where detriment is more likely.
The second phase will focus on the processes firms have in place and whether they help or hinder customers when they are shopping around.
Better Retirement Group director Billy Burrows says: “I think there is a danger that the FSA will be myopic and just focus on prices.
“Getting the best rate is just the tip of the iceberg. It is important people shop around but if they are shopping around for the wrong type of product then you have not solved the problem.
”That is why getting independent financial advice is so important.”
Hargreaves Lansdown pensions investment analyst Laith Khalaf says: “The issue is transparency. You cannot just look at best buy tables because not everybody publishes their annuity rates, plus the shape of the annuity can be just as important as the cost.”