Strange then that it has been left mainly to the press to address this issue while the industry has for the most part moved as far as it has been forced to but no further?
Eight out of 10 people who do not switch from their current pension provider could get a more generous retirement income yet they do not do so, usually because they have not got a clue what is going on.
Just when they need a friendly chat with someone who can talk in plain English, they are instead swamped in jargon-filled ‘information’ packs.
It is a time when financial advice should come into its own. But many pensions are so small that independent advice is not a practical proposition for either party.
Research by adviser search website Unbiased suggests only 27 per cent of people feel confident about arranging an annuity without advice – yet this is precisely what most people do.
We must wait 12 months for the final competition market study report when the FCA will publish proposed remedies.
In that time a further 420,000 annuities will be sold. If current trends continue 168,000 will be sold to existing customers suggesting more than 134,000 people will be tied into a poor deal.
Further research may provide long-term ideas but we need action much sooner.
Pension minister Steve Webb’s suggestion of a 12-month cooling-off period is a cracker. Most people have many other concerns in the run-up to retirement so sorting out their pension falls off the radar.
Giving them a year to reassess would focus firms’ minds on making sure they got a good deal from day one.
Additionally, the FCA has highlighted its concern over hidden commissions. So why not put the industry on notice that they must end?
Fidelity makes an excellent point when it says that anyone who cannot be honest about such a simple thing as the actual cost is probably not going to be helpful in more complex areas.
Industry, regulators and consumer groups can also work on a standard format for a pensions passport to be issued to every investor helping them to shop around.
The FCA should make it clear that firms which deliberately attempt to mislead consumers will face harsh sanctions.
The FCA should make it clear that firms which deliberately attempt to mislead consumers will face harsh sanctionsPension firms should be forced to tell investors that they could be substantially better off if they take advice or shop around.
The government should allow pensions up to £10,000 to be taken as a lump sum. The FCA has confirmed there is no realistic annuity market at this level.
And let us stop the sale of annuities as a no-risk product. They carry considerable risk and consumers must be made aware of these facts in basic, simple language.
Now there is a debate we (both journalists and advisers) have a duty to ensure the momentum for reform is unstoppable.
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Mixed blessing on guarantees
Friends Life’s with profits declaration illustrates the effect that guarantees and the asset mix can have on pay-outs.
While guarantees were a useful marketing tool, they have proved to be a mixed blessing for investors.
Funds forced to adopt a conservative approach to meet regulatory requirements have in general given a poorer return to investors.
In many cases feeding the bird in the hand has led to severe under-nourishment of the second in the bush.
In Friends Life’s case the former Axa funds with 60 per cent in shares and property returned 11.4 per cent before tax in 2013.
Pre-demutualisation Friends Provident policies with as little as 45 per cent in shares and property returned just 7.5 per cent.
In real terms former Axa customers with a benchmark £50-a-month endowment would receive £34,603 compared with £29,586 for the Friend Provident ones.
Both seem sorry returns for 25 years’ investment – but some are more pitiful than others.
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Fos complaints raise a smile
Normally I would consider a rise in complaints to an Ombudsman a cause for concern. But the news that pension liberation complaints to the Pensions Ombudsman have increased five-fold may be a reason to celebrate.
It must be frustrating for the individuals involved if they have a genuine case.
But this does suggest insurers are being more vigilant about protecting their investors from being duped by liberation companies.
Pension liberation is a nasty business that is often built on misleading investors who may be oblivious to the tax implications.
These extra complaints may be the collateral damage in protecting the innocent and uninformed.
