The ABI’s new annuity window has exposed the huge differences between the annual incomes available to consumers who stay with their pension provider and those who shop around.
The tool offers a snapshot of the rates offered under different scenarios, with up to a 46 per cent difference between some enhanced annuity deals and a 30 per cent difference on standard rates.
Lloyds Banking Group brands, including Scottish Widows, which see much of their business come from internal vesting, were among the worst offenders.
In exposing the scale of the cuts to potential retirement income experienced by consumers sticking with providers which do not offer competitive open market rates, the tool provides a valuable service. We hope those performing badly will be shamed into increasing their rates.
However, its usefulness to consumers is limited. Annuity Direct chief executive Alan Higham highlighted serious concerns about the service in an article on the MM website last week, including worries the simplistic portrayal of rates, which may well not be available to the individual client, could seriously undermine annuity advice.
As the debacle over missing enhanced annuity providers on the Money Advice Service website shows, relying solely on limited price-led online guidance can be a dangerous game to play. For anyone with a decent-sized pension pot, there are serious, often complicated, questions to be answered about the annuity process; chiefly whether an annuity is the right place to be at all.
Limited online information is no substitute for a professional advice service which is likely to lead to significant increases in retirement income.
Massow failure was no surprise
Readers can be forgiven for indulging in a little schadenfreude on the MM website last week after we reported on the failure of Ivan Massow’s trail commission venture.
The anger which followed our revelation that the firm will keep any future trail, if the customer does not move to another adviser, is also understandable. Massow has now clarified that the firm will look to deregister, with any trail not moved by that point kept by the insurer.
Massow’s failure was no surprise. The simplistic “trail commission scam” picture he painted at launch was far from the reality experienced by most clients.