I do recognise the problems that the regulator has. The difficulty for investors or the public at large is to understand what game they are playing – sometimes it really is not clear. Take Saga for example. They have been criticised for sending mixed messages. On the one hand they have been advocating shopping around for a better annuity, using an open market option, yet on the other they have a marketing arrangement to offer Legal and General annuities. Which? have cited this double standard and of course Saga have put their PR machine to work.

Annuities are a “problem area”. Most people don’t have very big pension funds so the scale of the problem may not be fully known. However many people simply opt for what their employer or pension provider offer as an annuity. A proper review of all of your pensions together with a proper assessment of your required income for the remainder of your life is pretty vital when making an often irreversible decision about which annuity to pick. I’m often perplexed at how many companies (big ones) get away with a very reckless approach to these sort of decisions – bar of course the “catch all” disclaimer form that excuses them from any responsibility.

We have been doing some work for a client on this and were surprised to find that the employer’s own annuity was better than anything we could find. This has never happened to me before. So my advice was to go with the better option offered by the employer (because my job is to secure the best deal for the client). However we weren’t informed of an error that the employer had made (an honest one) which we hadn’t made, (our figures were right) this made a significant difference and resulted in the best deal that we secured being 6% better each month for life. So the client has now been able to “switch horses” to get the best possible deal.

Frankly, there was a degree of luck that this was caught, for many hundreds or thousands of people out there, they don’t get a second chance with their financial planning. The jargon is often baffling and I’m sorry to say that I find little to suggest that this is not deliberate. The big scandal in financial planning is not the charges on pensions or PPI but on the deliberate mis-information spewing from the marketing departments of large organisations that is taken at face value. This is not restricted to more complex elements of financial products but even on the very simple ones, such as “guaranteed bonds” that are taken out in conjunction with an investment. Sorry, but this is not good enough and people are being ripped off.

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