Pensioners should be able to switch their annuity contract in a similar way to switching mortgages, Steve Webb has said.
The pension minster told the Sunday Telegraph annuities - which at present cannot be altered after the point of purchase - should be far more flexible.
Webb told the Sunday Telegraph: "When you take out a mortgage, in a few years if rates change you can switch your mortgage.
"But when you take out an annuity, that's it - for life. This could easily be for a quarter of a century. Why shouldn't you be able to change your annuity provider so a few years later somebody else could offer you a bigger pension? Why shouldn't you be able to shop around?"
However, experts said comparing annuities to mortgages was "misleading".
Mark Wood, chief executive of JLT Employee Benefits said: "A mortgage simply finances the purchases of a house while an annuity guarantees an income for life, however long an individual lives. Allowing people to chop and change runs the risk of making this guarantee unaffordable.”
Wood, the former UK and Europe Prudential chief executive, added that the annuity market was evolving rapidly, citing the growth of enhanced annuities which pay out higher income to people with shorter life expectancies.
“With annuity rates at historic lows, allowing switching as rates improve, may well encourage those deferring the purchase of their annuity on the expectation of better rates in the future, to commit to an annuity at this point in time," he commented on Webb's idea.
Elsewhere, Webb (pictured) also claimed "murky things" happened to consumers at the point of annuity purchase.
"There are odd percentages going in funny places for no good reason," he said. “We need to ensure it’s transparent. This is a complicated transaction for many people. The industry understands this stuff, the public don’t.
“I think lottery is a fair word. We are worrying about charges, but if the outcome at retirement can differ by 15% to 20% or more just because of who you go to, that’s a huge difference and so there can be an element of a lottery in that.”
Some 400,000 people a year currently buy an annuity and sales are expected to double over the next few years, partly as a result of auto-enrolment which will see millions more people save into a workplace pension scheme.
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