I suppose it was inevitable that Ros Altmann would nail her colours to the annuities mis-selling mast. We need to be very careful in examining past annuity sales.
The average size of each of these was small, under £30k. A provider has a duty to make the client aware if there is an open market option. If its own rates are poor perhaps it has a duty to tell them that they had better go elsewhere. I know Allied Dunbar used to say so.
There is a cost involved in assessing all the options. Ms Altmann makes a big issue out of commissions being paid. From memory, the commission rate on an annuity of this type was 1.25 per cent of the amount of annuity. On a £30k fund providing a pension of say £1,800 a year, this would amount to £22.50. Would she get out of bed for that?
Very few companies offered enhanced annuities for impaired lives. You can only deal in products that are available at the time. Now that they are more common, the rate for the superfit and average fit has declined so that they get worse terms than they would otherwise have got. By looking after the interests of the infirm few Ms Altmann is disadvantaging the fit many.
Icki Iqbal
Former director
Deloitte, Cobham, Surrey
