Pensions minister Steve Webb has questioned the value for money offered by insurers and non-advised brokers as he continues his assault on the annuity market.
The Liberal Democrat MP caused a storm earlier this month when he suggested people should be able to switch annuity provider if they can get a better deal elsewhere.
Speaking on BBC Radio 5 Live last week, Webb said: “Many of these products are not good value at the moment because you have to live to 90 or even 100 to get your money back.
“Some of the people who have been critical of what I have said are people who make their living selling annuities. We have to be on the side of the consumer here.
“There is a lack of advice for people, particularly people with small amounts of money who are not going to pay hundreds of pounds for advice. This market needs a big shake-up and I am trying to poke it with a big sharp stick.”
Hargreaves Lansdown head of pensions research Tom McPhail said the Government should focus on increasing the number of people who shop around at-retirement and insisted annuities are, in general, a value for money product.
However, in response Webb said: “I simply don’t buy this argument that annuities are good value for money. Tom McPhail is an annuity broker and he is promoting annuity brokers. There are questions about whether people are getting value for money from those types of services.”
Annuity Line head of business development Billy Burrows says: “Now is the time for cool heads rather than big sticks. The annuity market has improved significantly in recent years and the focus should be on strengthening the position of the consumer.”