The Financial Services Authority (FSA) has identified consumers abandoning annuities as a cause for concern in this year's Retail Conduct Risk Outlook.
Following the removal of the age 75 rule, low gilt yields and the onset of Solvency II which may further increase the cost of annuities, the regulator expects retirees to increasingly move away from annuity purchase. Alternative products such as income drawdown may not be appropriate. It warns annuity alternatives may pose the following risks for consumers looking to withdraw income: • the capital value of the fund may be eroded; • the investment returns may be less than those shown in the illustrations; • annuity or scheme pension rates may be worse in the future; and • high...
To continue reading this article...
Join Professional Adviser for free
- Unlimited access to real-time news, industry insights and market intelligence
- Stay ahead of the curve with spotlights on emerging trends and technologies
- Receive breaking news stories straight to your inbox in the daily newsletters
- Make smart business decisions with the latest developments in regulation, investing retirement and protection
- Members-only access to the editor’s weekly Friday commentary
- Be the first to hear about our events and awards programmes