The Financial Services Authority (FSA) review into pricing in the annuity market prompted discussions at the Employee Benefits Pensions and Workplace Savings Summit on 31 January 2013.
Chairing a panel debate on whether auto-enrolment will lead to better retirement outcomes for employees, Debi O’Donovan, editor of Employee Benefits, raised the issue of the pricing of annuities and the role of the employer.
Dr Yvonne Braun, head of savings, retirement and social care at the Association of British Insurers (pictured), said: “There is a concern that people won’t end up with a suitable product, or that they won’t get a competitive deal. Employers can support people in making better decisions about what the best product is.
“Employers have a role to play in being more proactive with regards to the open market option: give information, so that employees need to carefully think about their decision, as it is a once in a lifetime decision; so that they get the best deal possible.
The more employers do in this space, the better.”
One issue employers could consider is whether they should offer staff a choice of annuity providers. However, Doug Taylor, financial services chief advocate at Which? said: “How would an employee judge the best provider?”
Debbie Harrison, senior visiting fellow at The Pensions Institute at Cass Business School, added: “An employer wants employees to get the best outcome, but it doesn’t want to be held liable further down the line.”