Pensions - Articles - Just Group comment on the FCAs Sector Views report

Retirees are less likely to switch provider when taking out income drawdown or guaranteed income for life plans than they are for credit cards or cash ISAs although shopping around rates are slowly edging up, according to the Financial Conduct Authority’s Sector Views.

 Commenting on the report, Stephen Lowe, group communications director at Just Group, said: “Just 48% of drawdown customers and 43% of annuity customers switched to a new provider, slightly up from 44% and 38% respectively two years earlier. That compares to more than two-thirds switching when taking out cash ISAs (70%) or credit cards (67%).

 “The FCA points out that switching could often significantly increase retirement income so stubbornly low levels go to the heart of whether customers have the information or inclination to find the best deals in a very complex market. It reinforces the importance of steering many more people towards the free, impartial and independent guidance offered by Pension Wise and also towards professional advice.

 “Those who don’t receive professional help are more likely to end up in higher cost plans, according to the FCA which found only 29% of non-advised drawdown customers pay below the 0.75% workplace pension charge cap, with a clear clustering around 1%. This reinforces the importance of investment pathways for those who are less willing or able to engage with their decisions.

 “Ultimately there is a great deal to be positive about in the report such as the very low level of complaints about pensions and falling scam numbers. But it is clear that some of the main problems of the pre-‘freedom and choice’ era are persisting and continue to put consumer outcomes at risk.”

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