Editorial: Your puzzle awaits
You wait a lifetime for proposals to reform the retirement income market, and then suddenly three come along at once.
But have any of them got decent mileage? After the pensions minister's suggestion of switchable annuities went down unsurprisingly badly with sellers of the products, shadow work and pensions secretary Rachel Reeves MP was next up.
Writing in The Telegraph, Reeves set out the Labour Party's plans to fix the "broken" pensions system. The complexity in the annuity market, she wrote, "suits the pensions industry at the expense of savers, who are confronted with an overwhelming array of products and offers".
Labour would make the average saver £400 a year better off, by requiring that all scheme members are referred to an independent broker at retirement to make they get the best deal.
Illustration by Ben Jennings
Many schemes are already ahead of the shadow minister here, with nearly half set to put in place independent brokering of annuity purchasing. But what of those for whom annuity is not the best option?
On Friday, the Financial Conduct Authority grabbed the headlines with its thematic review of the annuity market, and launching a fuller study of how the market works (or does not work) for savers and how it could be improved. Interim findings are expected in the summer and the final report within the year.
The thematic review does not tell us anything that is particularly surprising, but in itself that says enough about the turgid state of the market, played out in the same tired arguments going back and forth on social media.
So, to tell you something you already know, the FCA found four out of five people would get a better annuity deal if they shopped around, and two groups in particular are losing out: those with small pension funds and those eligible for an enhanced annuity that do not explore the option.
Industry experts quarrel on the numbers and obviously no the solutions. It is important to get the evidence in place, but savers – whether they realise it or not – need action, rather than another review. It is hard to kick the feeling that a full market survey landing just before a general election might not trigger the decisions that are desperately needed.
Ian Smith is editor of Pensions Expert. You can follow him on Twitter @iankmsmith and the team @pensions_expert.