Annuities scandal worse than P.P.I?

A couple of weeks ago I watched a thought-provoking episode of Channels 4’sDispatches. I’ve found myself thinking about it frequently since and often mentioning it when talking to clients – many of whom saw it as well.
In the programme Michael Buerk investigates the pensions crises. As the cost of living rises faster than many pay packets and life expectancy increases, he asks what your pension is really worth. This isn’t a new subject – we read about in the papers every day. But something that isn’t so well-documented to that the programme highlighted is the mis-selling of annuities.

Annuities are what the majority of us buy with our pension pot to give us a regular income in retirement.  The problem is that many people don’t consultant a financial advisor about which annuity to buy and just opt for the one that their pension provider sells them. Shockingly – for most – this means that they could have been thousands of pounds better off had they shopped around, or better still take independent advice.

The one thing that you will definitely remember if you watch this programme is the quote: “The mis-selling of annuities could be on a larger scale than the mis-selling of P.P.I.”

The programme gives specific examples too – and for anyone who isn’t a financial advisor it makes sobering viewing. Here is a link to episode. I’m not sure how long Channel 4 keep it on 4OD – their on-demand player – so watch it while you can. It lasts half an hour. 

The second half of the programme is also an interesting watch: It exposes companies offering “pension liberation” – the chance to take money from your pension before age 55. HMRC are quite clear that this is illegal, yet the companies offering “work-arounds” continue to abound.

As a Independent Financial Advisor I couldn’t help but think having watched the programme, that never has there been a more compelling time to have someone like me looking after you. Mind you, I suppose I would say that. But go on, have a look at the programme – I don’t think you’ll disagree with me.