Annuity Review

[Outandup100]

As I understand it, the FCA is carrying out an investigation into possible wrongly sold annuities.

To facilitate this, every holder of an annuity purchased between July, 2008 and May, 2016, (over £5000 and said annuity purchased on a non advised basis) is being requested to complete a questionnaire.

This is ostensibly being done to aid people who should have received a higher pension because their medical conditions were not properly assessed.

But could this backfire on recipients of pensions? Following completion of the questionnaire, might they be informed that they had been overpaid and their pension not only be reduced, but they had to repay money?

e.g: A pension recipient said they did not smoke when they took out the annuity, but now admits that they actually did smoke at that time, in the review questionnaire

[swill453]

e.g: A pension recipient said they did not smoke when they took out the annuity, but now admits that they actually did smoke at that time, in the review questionnaire

Surely that would mean they've been receiving a lower payment than they should have been.

Scott.

[Loadofrubbish55]

So they might be rewarded for lying on the original application?

ie: They are receiving x pension because they said they didn't smoke when they started paying for the pension, but they were lying, they did smoke. Now there is a review of whether the pension they took out was miss sold. As I understand you, you are suggesting that if they admit the lie, the pension will be increased rather than cancelled

[Alaric]

Be careful about using the word pension as it can have two meanings.

In the context of this review I think it's about what happened when someone takes a pension (used in the sense of a pot of fund wealth) to buy a pension (used in the sense of a lifetime annuity income). If at the time of conversion from fund to annuity, questions weren't asked about the state of health of the applicant, this is where the review may click in. In the context of an annuity, applicants in poor health could have been offered better terms had the appropriate questions been asked.

[Loadofrubbish55]

In the context of an annuity, applicants in poor health could have been offered better terms had the appropriate questions been asked.

Thank you Alaric,

I agree. They weren't in poor health so the review doesn't apply I think

[Alaric]

They weren't in poor health so the review doesn't apply I think

My guess is that no questions were asked when they bought the annuity at their retirement age. With extra questions about state of health, the expectation is perhaps that the amounts paid could only increase.

Against that if someone understood the annuity market well enough to be creative about their health, they may have a problem in answering the questions. Perhaps they can decline to be reviewed.