Hargreaves Lansdown has detailed a five point action plan to reform the retirement planning sector following the widespread criticism of the annuity market by the Financial Services Consumer Panel this week.
The Bristol-based investment platform and Financial Planning provider, says the FSCP should be applauded for shining a light on poor value for consumers in the annuities market. The FSCP says annuity choices made by consumers are often poor and better advice and guidance is needed as well as better practice from providers.
Tom McPhail, head of pensions research at HL, said: "'The FSCP is right to identify that the market doesn't work for investors at retirement. Everyone has unique needs so the solution has to revolve around making it much, much easier for them to find the retirement income solution which meets their particular needs. At the moment the system is so impenetrable it is hardly surprising that over half of retiring investors don't even shop around for the best deal."
HL's 5 point action plan to improve the retirement market comprises:
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1. Launch a task force, comprising Treasury, FCA, DWP officials and representatives from the pensions industry.

2. Make shopping around the default at retirement - rather than offering the open market option as an afterthought, it should be the default solution for all retiring pension investors.

3. Reform the Trivial Commutation rules to make it easier for savers with small pension pots to get their money back.

4. Introduce a requirement for all auto-enrolment schemes to have a shopping around process built into their minimum standards.

5. Launch a directory of shopping around brokers with minimum standards (PICA will launch one on 13 January 2014).

HL says that to help consumers the industry should consider the shape of annuities annuity as well as the rate- for instance whether to include a spouse's pension or inflation-linking. Consumers should also consider providing full details of health problems as they could get you a better rate and wealthier investors should consider drawdown as well as annuities. Some consumers should connsider consolidating pensions to make them easier to keep track of in the run up to retirement.