It always comes as a shock to me when I hear stories about people not shopping around for the best annuity rates because I assume everybody knew they could get a higher annuity from a company with better rates.
But, of course, everybody did not know about the advantages of open market annuities as witnessed by the high-profile reviews into the market; Prudential's intention to withdraw entirely from the annuity market highlights the changing dynamics of the sector.
It is easy for people like me who lived in an ‘annuity bubble’ to think that everybody read the newspapers or listened to the radio, but in reality many people either did not listen or felt under some obligation to accept the offer from their annuity provider. It can be argued that some companies had a vested interest in making sure customers were kept in the dark so they bought annuities at low rates, thereby earning huge profits
I go on to talk about:
- The blame game
- The commoditisation of annuities
- Increased sophistication in underwriting