Richard Jones, Annuities, Bancassurance & Protection Director, Scottish Widows says:
“Scottish Widows welcomes and supports the FCA competition market study of annuities. We believe the industry must take the lead in delivering solutions to ensure all customers understand their choices, know how to shop around to get a competitive deal and that their personal circumstances are fully reflected in their options.
“While it is clear that customers value the certainty of income for life that an annuity brings, the current system of annuity provision has to be improved and we are determined to lead the way in working with Government and regulators and the rest of industry to take action.
“There are a number of initiatives that could make a real difference to the customer outcome:
- Help customers understand their options. For example, providers must have conversations with every one of their customer to explain their choices at retirement and the vesting of their pensions, ensuring that any valuable guarantee options are understood.
- Vesting providers must ensure that customers are offered competitively priced annuity choices.
- Value and transparency. Shopping around services must be of a consistently high standard to ensure good outcomes for customers, such as showing transparent costs for both advised and non-advised services, and commission charges by distributors must be fair and reasonable. It is vital all customers understand how to shop around and switch.
- Right solution for a customer’s circumstances. The industry should ensure customers get the right policies for their needs. For example, taking health factors into account or ensuring married couples are provided with a default joint life quote and communicating clearly the impact of not taking a joint life policy.
- Small pots. The options available for small pots need to be reviewed, in particular the threshold of converting pension pots to cash - trivial commutation rules.”
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