Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Moody's - Climate Risk Insurers series
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • June 2013
06

Retirees short-changed with poor annuity advice, says NAPF

Open-access content Tuesday 25th June 2013 — updated 5.13pm, Wednesday 29th April 2020

People about to retire are getting insufficient support from employers in choosing their annuity, the National Association of Pension Funds has warned.

The NAPF today issued a report on the advice and brokerage market used by private sector employers who offer defined contribution pensions. It said savers retire with poorer annuities than they could have got if support to 'shop around' the annuity market been included in their pension arrangements.

But employers that offer defined contribution pensions are only required to provide basic information on this.
The NAPF said there should be more support for employers and trustees to help staff with decisions around annuities and income drawdown.

Problems highlighted by the NAPF in disseminating information on buying annuities included employers being too scared to go beyond the legal minimum in helping staff at retirement because they fear legal comeback, something the NAPF said was often based on misconceptions
Smaller employers were also reluctant to meet the cost of setting up guidance and advice services, while those people with smaller pension pots were less profitable for advisers and brokers.

The report noted that the advice and brokerage market can be complex for employers to understand.

Mel Duffield, NAPF head of research and strategic policy, said: 'As [people] approach retirement what they really need from their employers is more support and advice. But at the moment there are market barriers that stop that happening more widely.

'People should automatically shop around for the best annuity when they retire, and employers and pension trustees can do more to make this happen. While insurers are getting better at communicating with savers, it is still the case that hundreds of thousands are failing to obtain quotes and compare prices in the market.'

Duffield said decisions around securing a retirement income were 'baffling' and savers needed independent help to make sensible choices.

The NAPF will launch a Made Simple Guide for trustees and employers later this year. It will also enhance its training and development for trustees and employers running defined contribution pension schemes. 

Commenting on the NAPF's findings, Tom McPhail, chair of the Pensions Income Choice Association, said: 'Now the government has decided to set minimum standards for auto-enrolment pension schemes, it is essential that it sets out in the current Pensions Bill suitable standards 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% 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.'

This article appeared in our June 2013 issue of The Actuary .
Click here to view this issue

You may also be interested in...

DWP raises cap on PPF payouts

Pension Protection Fund payments are to take account of an individual’s length of service, paying an extra 3% for every year of service over 20 years, pensions minister Steve Webb has announced yesterday.
Wednesday 26th June 2013
Open-access content

LGPS faces further changes

Council pension schemes face changes as Whitehall and local government leaders try to better co-ordinate the 89 funds in England and Wales.
Friday 21st June 2013
Open-access content

SMEs have 'low awareness' of auto-enrolment

Small- and medium-sized businesses have less than a year to go to get their workplace pension schemes up and running, yet awareness of their obligations remains ‘relatively low’, research from MetLife has shown.
Friday 21st June 2013
Open-access content

Three-quarters of pension schemes 'have outsourced administration'

An increasing number of UK private sector pension schemes are outsourcing their administration in a bid to save costs and deal with increased regulatory requirements, a survey published by Aon Hewitt has found.
Wednesday 12th June 2013
Open-access content

FTSE 350 deficits fell by £10bn last month, says Mercer

The aggregate deficit of the UK’s 350 leading companies fell by £10bn in May despite a decline in equity values towards the end of the month, Mercer said today.
Thursday 6th June 2013
Open-access content

Incomes drop at least a third on retirement, says Partnership

People can expect their average income to drop by at least one-third on retirement, with retirees in London facing a fall of almost 50%, according to figures published by Partnership today.
Tuesday 4th June 2013
Open-access content

Latest from Pensions

ers

By halves

Reducing the pensions gap between men and women is a work in progress – and there’s still a long way to go, with women retiring on 50% less than men, says Alexandra Miles
Thursday 2nd March 2023
Open-access content
rdth

Make My Money Matter's Tony Burdon on the practical power of sustainable pensions

Years working in international development showed Tony Burdon, head of Make My Money Matter, that sustainable pensions can harness trillions of pounds to build a better world – at a scale governments and charities can’t. He talks to Travis Elsum
Wednesday 1st March 2023
Open-access content
KV

Liability-driven investments: new landscape

What now for liability-driven investments, after last year’s crash in the market? Pensions experts Rakesh Girdharlal and Moiz Khan say it should lead to a more balanced approach
Wednesday 1st February 2023
Open-access content

Latest from June 2013

ta

'Twentysomethings' willing but not able to save, poll finds

Young workers across the world have the ambition but lack the resources to save for retirement, research has suggested.
Tuesday 12th November 2013
Open-access content

DB pension deficit climbs by £6bn

The aggregate deficit of UK companies’ defined benefit pension schemes increased by £6bn in October driven by falling bond yields, Mercer said today.
Monday 11th November 2013
Open-access content

Top 500 pension fund asset value rises 8%, says Towers Watson

Assets managed by the world’s largest 500 fund managers rose by over 8% to $68 trillion in 2012 according to research by actuaries Towers Watson.
Monday 11th November 2013
Open-access content

Latest from no_opening_image

TPR publishes coronavirus guidance

The Pensions Regulator (TPR) has published guidance to help UK pension trustees, employers and administrators deal with the financial and regulatory risks posed by coronavirus.
Monday 23rd March 2020
Open-access content
web_p24_cat-and-fish_iStock-483454069.png

Sensitivity analysis: swimming lessons

Silvana Pesenti, Alberto Bettini, Pietro Millossovich and Andreas Tsanakas present their alternative approach to sensitivity analysis
Wednesday 4th March 2020
Open-access content
ta

IFoA adjudication panel: Mr Jack Wicks, student

On 30 October 2019 the Adjudication Panel considered an allegation of misconduct against Mr Jack Wicks (the respondent).
Friday 28th February 2020
Open-access content

Latest from 06

ta

'Twentysomethings' willing but not able to save, poll finds

Young workers across the world have the ambition but lack the resources to save for retirement, research has suggested.
Tuesday 12th November 2013
Open-access content

DB pension deficit climbs by £6bn

The aggregate deficit of UK companies’ defined benefit pension schemes increased by £6bn in October driven by falling bond yields, Mercer said today.
Monday 11th November 2013
Open-access content

Top 500 pension fund asset value rises 8%, says Towers Watson

Assets managed by the world’s largest 500 fund managers rose by over 8% to $68 trillion in 2012 according to research by actuaries Towers Watson.
Monday 11th November 2013
Open-access content
Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Shape the Future of Insurance

London (Central)
£ excellent package
Reference
149090

Senior Pricing Actuary - Life Reinsurance

London (Central)
£ excellent
Reference
149089

Insurance Investment Leadership Opportunities

Flexible / hybrid with 2 days p/w office-based
£ dependent upon experience
Reference
149088
See all jobs »
 
 
 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2023 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ