The FSA is to review the speed at which pension providers transfer open-market annuity option funds, with action threatened against the slowest for not treating customers fairly.
Legal & General wealth policy director Adrian Boulding says: “It will make the FSA behave like a Rottweiler and crack down on those insurers which are dragging their feet on pension transfers.”
Syndaxi principal Robert Reid says: “If someone’s annuity is not capable of being set up within a 30-day period, they should be fining chief executives.”
The move was announced as part of the pre-Budget report. But the Government is under fire for stifling innovation elsewhere in the annuity market, after saying it will not change tax legislation to foster the development of hybrid annuity products because this would add complexity and benefit only a small number of consumers with big pensions.
Aegon head of pensions development Rachel Vahey says reform could benefit consumers with medium-sized pensions. Winterthur Life pension strategy manager Mike Morrison calls it a missed opportunity.
Standard Life head of pensions policy John Lawson says: “They are effectively not allowing an open market. They are forcing people to buy inflexible annuities and this is a victory for traditional annuity providers, so the likes of Prudential will be dancing in the street.”