At the beginning of this year, Pensions Minister Steve Webb called for pensioners to be given the power to switch annuity providers, in much the same way as mortgages can be switched. At the time, insurers protested that this was an unfair comparison, that annuities were much more complicated than mortgages. Well, they would say that, wouldn’t they?
Annuity providers had been rightly criticised, for confusing, less than transparent, products, and for charging unnecessarily high commissions.
Regulators have criticised the sale of these contracts, describing the market as not fit for purpose. In a report last month, the Financial Conduct Authority warned that middle-class savers were being left thousands of pounds out of pocket after being sold poor value or inappropriate contracts which, once signed, could not be changed.
Fast-forward less than three months, and Chancellor George Osborne has announced that savers will be able to withdraw their entire pension pot in cash from 2015. I did suspect that Steve Webb’s earlier announcement was only just a hint of what was to come.