‘Wake-up call’ over pensions income

half a million private-sector workers retiring each year are being “short-changed” by up to £1 billion from their total future income, pensions bodies will warn today.

Evidence of “sharp practice and murky pricing” in the annuity market was found by a report from the National Association of Pension Funds (NAPF) and the Pensions Institute (PI) at Cass Business School. It called for more transparency and greater scrutiny from UK government, with more “shopping around” to help retirees get the best deal.

Failing to shop around for a better deal can wipe 30 per cent off someone’s annual pension income, and in some cases halve it, the report said.

PI director Professor David Blake said: “This report is a wake-up call to the pensions industry, the government and the regulators. If the annuity system is not radically overhauled, employees in defined contribution schemes will suffer massive detriment.”