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Baroness Greengross writes for ePolitix.com ahead of her oral question on pension annuities
My reason for asking my question on pension annuities is to emphasise the fact that too many potential annuitants are seemingly unaware of the open market option. I am seeking to remind the government of the approach taken by the Pension Income Choice Association (PICA), who believe that the default option should be for everyone to have the opportunity to review their options at retirement: PICA recommends the production of a personalised statement or 'passport' containing sufficient information for people to use to obtain quotations.
The move from defined benefit (DB) to defined contribution (DC) pensions, and the lowest savings ratio in almost 30 years, means many people retiring in the future will face far greater financial challenges than previous generations. Against this background, it is disappointing that a great number of people who have saved for years in DC pension schemes might not maximise their income.
Surprisingly, some 62 per cent of retirees do not shop around; instead they just accept that the first annuity quote they receive from their current pension provider is acceptable. There is quite often a huge differential in the annuity rates of insurance companies, sometimes as wide as 20 per cent. Many annuitants do not realise there is an open market option and not enough seek independent financial advice.
Progress in these key areas is urgently required and I am seeking an assurance from the government that the above ideas are at least on the table for consideration.
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