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UK government consumer panel warns against annuity rip offs
| Published: | 10 Dec at 6 PM |
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Expat destinations and the UK are hotspots for unprincipled financial advisors ripping off new retirees attempting to purchase annuities with their savings.
In another blow to hard-working retiree savers, the Financial Services Consumer Panel arm of the UK’s City watchdog is warning about insurers and their middle men who are making fortunes from annuity fees. Rock bottom interest rates, it seems, are driving desperate pensioners into the arms of the commission-hungry.
The FSCP report found that middlemen use confusing, complicated jargon to baffle their victims, backed up by hard-sell techniques, and dupe many as to the cost of transferring to an annuity with misleading small print. An average charge for the transfer of £100,000 is £2,750, although as much as £6,000 has been charged.
Brokers and advisors are tying up with providers offering heavy commissions rather than researching the market for the best deal for their clients, and many pensioners have been left with inadequate payouts as a result. According to Debbie Harrison, an author in the report, retirees have no idea how complicated annuities can be until it’s too late for them to back out.
As with pensioners resident in the UK, expat retirees living abroad are faced with the same problems, but with the added risk that trustworthy local financial advisors are very hard to find in most popular expat destinations. In addition, insurers in offshore financial centres such as the Isle of Man are fully aware that retirees are being ripped off, but happily accept the business.
In another blow to hard-working retiree savers, the Financial Services Consumer Panel arm of the UK’s City watchdog is warning about insurers and their middle men who are making fortunes from annuity fees. Rock bottom interest rates, it seems, are driving desperate pensioners into the arms of the commission-hungry.
The FSCP report found that middlemen use confusing, complicated jargon to baffle their victims, backed up by hard-sell techniques, and dupe many as to the cost of transferring to an annuity with misleading small print. An average charge for the transfer of £100,000 is £2,750, although as much as £6,000 has been charged.
Brokers and advisors are tying up with providers offering heavy commissions rather than researching the market for the best deal for their clients, and many pensioners have been left with inadequate payouts as a result. According to Debbie Harrison, an author in the report, retirees have no idea how complicated annuities can be until it’s too late for them to back out.
As with pensioners resident in the UK, expat retirees living abroad are faced with the same problems, but with the added risk that trustworthy local financial advisors are very hard to find in most popular expat destinations. In addition, insurers in offshore financial centres such as the Isle of Man are fully aware that retirees are being ripped off, but happily accept the business.
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