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With Christmas just around the corner and people rushing around to ensure they get their shopping done in time, could there be an early sign of Santa delivering some good news following a review of annuity sales?
Given the considerable changes taking place within the pension landscape, the Financial Conduct Authority (FCA) has been investigating the sale of annuities. In the FCA’s view, many consumers were missing out on a potentially higher income in retirement as they were purchasing their annuity from their existing Pension Provider and not shopping around.
This links into the government’s plans as announced in the 2014 Budget, with The Guidance Guarantee being introduced next April, meaning that everyone is entitled to access free, impartial guidance in order to help them make informed and confident decisions about how to use their pension savings at retirement.
The increased choice and flexibility that is being introduced makes guidance important, but guidance is only half the story, guidance only goes so far and many people, faced with a number of complex choices at a critical stage in their lives, need professional financial advice.
So what happens next?
Following their review, the FCA has asked a number of firms to do some further work in order to determine their findings. Whilst it isn’t a specific review of sales, they have asked them to gather statistical evidence from sales made since May 2008.
So who will this impact upon?
Predominantly annuity purchasers with medical conditions or certain lifestyle factors, who may have missed out on a higher level of income if they purchased a standard annuity, rather than an enhanced annuity. Some people may have missed out by not shopping around for an annuity from an alternative provider. What is clear is that FCA will be reviewing all the evidence and will consider what further action needs to be taken, if any.
As an Independent Financial Adviser, we have considerable experience in the retirement market and the ability to access solutions from the whole of the market. We only make recommendations when we’re fully aware of your personal circumstances, so if you require advice in this area, please contact one of our Financial Planning Consultants at any of our 15 office locations.
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