By Ian Walker
LONDON--The U.K. Financial Conduct Authority on Thursday said it
will go ahead with the recommendations for the retirement market
set out last December.
The review, started in February 2014, found that competition in
the retirement income market isn't working for consumers, with many
missing out on a higher income by not shopping around for an
annuity, and some not buying the best annuity for their
circumstances.
In December the FCA set out a number of remedies to address
these issues, including requiring firms to provide an annuity
quotation ranking so that consumers can easily identify if they
could be getting a better deal by shopping around; redesigning and
behaviorally trialing the information that consumers receive from
their providers, such as wake up packs, in the run up to their
retirement; and in the longer term, creating a pensions dashboard
which will allow consumers to see all their pension pots in one
place.
On Thursday, the FCA said it will go ahead with these
recommendations.
"The retirement income market is set for the biggest change in a
generation. Over the next 12 months we want to ensure that the
market is fit for purpose in the new landscape," Christopher
Woolard, director of strategy and competition at the FCA said.
"We received considerable support for our proposals and we will
be working with Government and the industry to implement all of our
recommendations so that consumers can have confidence that they are
getting the best possible outcome when making decisions on their
retirement income," he added.
In his March 2014 budget Chancellor of the Exchequer George
Osborne shook up the pensions market with a radical overhaul of
pension laws from April 2015. At that time he said pensioners no
longer need to buy an annuity--a form of income--from their pension
pot to provide for their retirement and can take the whole amount
in cash thereby giving them the flexibility to seek other forms of
income.
Subsequent to this, in his budget earlier this month, Mr.
Osborne said from April 2016 retirees will be able to sell existing
annuities without incurring a tax charge, enabling them to look for
a better deal.
Shares of all the big insurers are down in London. At 1000 GMT
Aviva PLC (AV.LN) shares were down 2.48% at 550 pence, Prudential
PLC (PRU.LN) was down 2.4% at 41.26 pence, Legal & General
Group PLC (LGEN.LN) was down 2.82% to 282.8 pence, and Standard
Life PLC (SL.LN) shares were 1.1% lower at 474.5 pence.
-Write to Ian Walker at ian.walker@wsj.com; @IanWalk40289749
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