The Pensions Regulator is under pressure to investigate the role of trustees in encouraging scheme members to shop around for an annuity due to concern savers are not getting a good deal when they reach retirement.
Earlier this week, the FSA confirmed it is scrutinising pricing data from providers to determine how much pensioners are losing out by not shopping around for a retirement product.
The thematic review is being conducted in two phases.
The first phase will analyse the level of detriment consumers suffer from not shopping around, and whether there are firms or particular groups of consumers where this detriment is more likely to occur.
This will involve a pricing survey of all annuity providers and will compare the rates available to consumers through a range of distribution channels, including rates available through the open market option and those only available to existing pension policyholders.
The second phase will consider whether firms’ processes for providing annuities facilitate or inhibit shopping around.
The FSA review does not extend to the role of pension trustees.
Hargreaves Lansdown head of pensions research Tom McPhail says: “The biggest problems with annuities lie with the trustees not buying properly on behalf of members.
“I find it staggering that trustees are doing such a poor job of it and nobody is asking why. TPR should be investigating this in parallel to the FSA’s review.”
Radcliffe & Newlands chartered financial planner Mel Kenny says: “It would make sense for both regulators to review the annuity market to ensure it is working properly.”
A spokeswoman for The Pensions Regulator says: “We expect trustees to shop around properly on behalf of members and we have made that clear in our regulatory guidance.
“If it becomes clear that further action is required then we will look at that when the time is right.”