OREANDA-NEWS. A themed inspection by the Central Bank has shown that consumers can significantly increase their income in retirement by comparing annuity rates across pension providers. As at 6 January 2016, consumers could increase their income by up to €29.57 per month, over €350 a year, by choosing the provider with the best rate.

The themed inspection consisted of a desk-based review and onsite inspection at a number of firms and included an examination of the sales process and documentation provided to consumers. Some of the key findings were as follows:

  • The Central Bank found a small number of instances where firms were unable to evidence that all of post retirement options were fully explored and in this regard, the Bank is engaging with the industry on a firm-specific basis;
  • While all firms informed customers of their right to purchase an annuity from any annuity provider, the literature provided to consumers did not always clearly explain this option to consumers; and
  • Although firms did explain “guaranteed payment periods” to consumers, firms did not always discuss the various guaranteed payment periods on offer.

Director of Consumer Protection, Bernard Sheridan, said: “We recognise that the purchase of annuities is a significant and complex transaction for most consumers.  This is a once-off purchase that can have a major impact on a consumer’s income in retirement. We therefore expect firms to act in a clear and transparent manner, and to make this process as straightforward as possible for consumers. This applies to their literature and to their interactions with consumers during the sales process.

Consumers have the right to purchase an annuity from any provider. As we’ve seen during this inspection, consumers can significantly increase their income in retirement by comparing rates across providers so consumers should seek out quotations from a number of annuity providers. There are also other options available, which consumers should consider, and which could make a difference to their income or the length of time they are guaranteed payment. As these are complex, long term products, we would encourage consumers to consider seeking financial advice to help them figure out the best product to suit their needs.”

The Central Bank is engaging directly with those firms where issues have arisen, to address the deficiencies identified and will take appropriate supervisory action.