Labour is pressing the Government to introduce a new duty for pension schemes to direct savers to the “best independent annuity brokerage service available” when they reach retirement.
Earlier this month, Hargreaves Lansdown head of pensions research Tom McPhail called on the Government to “hard-wire” minimum shopping around standards into automatic enrolment pension rules.
Labour shadow pensions minister Gregg McClymont wants the Government to force pension schemes to either direct savers to an independent annuity brokerage service or offer one themselves.
He says: “More and more people are waking up to the scandal of annuities rip-offs, but ministers are still sitting on their hands.
“This Government has brought forward a Pensions Bill that is just half a reform. For changes to the state pension to really work, the private pensions system must deliver value for money.
“Savers can lose a fifth of their pension income because the market simply is not working. Ministers must now act on private pensions and ensure there is fairness in the system – including in the purchase of annuities.
“It should be part of the duties of pension schemes to direct their savers to the best independent annuity brokerage service available or to offer such independent brokerage services themselves.”
The pensions industry has already moved to increase the number of people who shop around at retirement, with the Association of British Insurers launching a compulsory code of conduct for its members in March.
Better Retirement Group director Billy Burrows says: “There is no reason why schemes cannot do this themselves without Government interference and there is evidence already that this is starting to happen.”