A new advertising campaign has been launched by Aviva which highlights the lack of awareness when it comes to choosing financial products for retirees. The TV commercials feature Paul Whitehouse, a prominent UK comedian who is seen shopping around for a house in the South of France…
This jovial incident is meant to indicate that if you do not shop around for an annuity, you could lose out on potential income. Mark Hodges, Aviva’s CEO righly points out that…“…not everybody understands what an annuity is, and the benefits of shopping around.” You can say that again, barely 30% of new annuitants in 2009 are thought to have exercised their right to shop around between providers for the best deal.
This apathy for comparison between pension annuity providers is most acute for those holding smaller pension pots. Brian Steeples the MD at Turris Wealth Management in Glasgow noted recently that “…people rarely shop around for the best deal. That is where insurance companies make a lot of their profit.” He went on to state that certain companies such as Just Retirement were handling smaller pots well but that many companies in the industry were not acting in the same manner and were “…holding onto money and giving poor annuity rates.”
The FSA run a website to help annuitants known as moneymadeclear, but this has been criticised on several occasions. Industry expert David Trenner from Intelligent Pensions said that although the site can produce several quotations…” …the site does not offer much help in finding the best rate. By contrast, the Hargreaves Lansdown website provides quotes from all of the leading companies.” Other alleged problems include some providers heaping on additional charges to annuitants for switching their pension fund elsewhere.
