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Webb: Why I’m poking the annuity market with a ‘big sharp stick’

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.”

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. Webb says : We have to be on the side of the consumer here.
    Why is he not on the side of the consumer with respect to the state pension then when ho condones the discrimination of 500,000 + pensioners who get no indexing for their pension from the time that they retire or become eligible should they be in the wrong country. The man is busy picking holes in the industry but has this bad policy written into the new Pensions Bill. The fact that it is currently denying them any increases is nothing to be proud of. I trust that the new Pensions Minister who takes over at the next election when Webb is defeated will be better equipped to do the right thing. Pension parity is the only right and moral answer.

  2. Andy Robertson-Fox 17th January 2014 at 4:01 pm

    Webb says that he “does not buy into the argument that annuities are good value for money and that Tom Mcphail is an annuity broker and promoting annuity brokers”. Webb then continues, ” there are questions about whether people are getting value for money for those types of services”.
    May I point out that Steve Webb is the Minister for Pensions but he is not promoting value for money in his pensions industry for as long as he ignores the frozen pensioners justifiable claims for equality, justice and fairnes in the payment of the State Retirement Pension to people living abroad in those countries he continues to discriminate against?

    It is Steve Webb who needs to be “poked with a big sharp stick”, even at this late stage, to withdraw the iniquitous Clause 20 from his Pension Reform Bill.

  3. Whenever I see a picture of this man I have the uncontrollable urge to slap him! Pension inequality is a stain on the British reputation for fairness. To freeze the state pension cost of living increases for less than half of those retiring abroad whilst not freezing the majority just because of where they happen to live is blatant discrimination. ALL have paid into the NI scheme under the same terms, a fact not lost on Webb when he was in opposition, in fact he tabled an EDM on the injustice of this ‘policy’ and yet he has reneged on the pledge to end this. Ones entitlement to the state pension is dictated by ones contributions not where one lives.

  4. Steven Webb has a cheek, he along with his cronies in the UK government are stealing the pensions of thousands of UK pensioners just because they live in other countries. A slap is not severe enough for this man Jane. He and his cronies should be kicked out of the UK, or charged with theft, and locked up with the other criminals. They say they can’t afford the increases in their pensions, WHY? Because they are getting big fat salary cheques for spouting lies.

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