Retirees could be given the chance to switch annuity providers during a one year ‘cooling off period' after agreeing a contract, the pensions minister says.
In an interview with the Sunday Telegraph Steve Webb said the move could be one of many put in place to force greater competition in the market.
The Financial Conduct Authority (FCA) labelled the annuity market ‘disorderly' in a thematic review report out last week. It said 80% of retirees who stick with their original pension provider for their annuity purchase can get a better deal elsewhere.
Webb told the paper will consider "very seriously" any measures put forward which would increase competition.
It said other, more extreme proposals, such as banning people from sticking with their original pension provider in retirement would also be considered.
Webb told the Telegraph: "If self-regulation had worked, we wouldn't be in this situation. Although in theory people are encouraged to shop around there is still an in-built bias against it. We do need to reorder the way choices are made.
"Roughly half a million people are buying annuities a year. When you add it all together there is a substantial loss to retired people from all of this.
"We know people don't save enough for pensions, and that just makes it all the more pressing that we get every last penny out that we can."
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After 14-month FAS programme
More than half of people over the age of 55 see financial security as a top priority in retirement, yet a third allocate more time to buying a new car, research from Legal & General (L&G) has found.
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