According to the 24-page report, Supporting DC Savers at Retirement: an Analysis of the Advice and Brokerage Market, both fee- and commission-based charging models “are capable of delivering good member outcomes”.
However, the report, which was unveiled at the NAPF’s defined contribution conference in London, highlighted that only 52 per cent of employer-backed schemes employ a broker to search the market for a competitive annuity on their behalf. It also found that only 50 per cent of employees shop around before retirement.
Tom McPhail, head of pensions research for Bristol-based Hargreaves Lansdown and chairman of the Pensions Income Choice Association, said: “It is essential that the government sets out suitable standards in the Pensions Bill to help members shop around for a retirement income.
“A good starting point would be for all auto-enrolment schemes to match the ABI Code of Conduct in terms of guiding members towards a suitable type of annuity and to shop around at least 80 per cent of the annuity provider market to source a good annuity rate for their members. There is no reason why the government can’t do this right now.”