Will Pension Firms Abuse At Retirement Signposts

Will Pension Firms Abuse At Retirement Signposts.

Last month the FCA issued letter to the CEOs of all investment companies, pension companies, banks and insurers.

Pension companies have been much maligned for not making it clear to at retirement pension savers that they have choices in retirement, that they have the right to an open market option and that they have the right to shop around for the best deal.

The FCA has moved to make it clear to pension companies that they must make it clear to pension savers that they have choices and options.

The FCA suggested in its letter that pension companies must technically “sign post” savers towards guidance and financial advice before making any decision about what retirement options they are going to take.

The FCA has even suggested and is currently consulting on forcing pension companies to tell their clients who are about to retire whether the annuity rate they are being offered by them is competitive.

Will pension companies be forced to publish other companies annuity rates compared to their own?

Will pension companies then strike up relationships with competitor companies to make arrangements whereby they get paid an introducing commission

We suggest all this is dangerous. Plain and simple, people must sign a declaration confirming that they have received guidance and/or received advice and who gave it and when.

With pension companies being forced to point people to advice or guidance will they use it as a barrier to try and stop people transferring away from them.

We know you may feel this is all over-egging the pudding, but make no mistake, most pension companies have £billions invested with them and are they really ‘likely’ to suggest clients move money away from them? We suggest not. We do hope that it may provoke a more competitive at retirement market as more and more pension companies will be forced to revisit their ‘at retirement’ products to make them more competitive or risk losing the funds under management to a more competitive firm.