We have published the findings of our thematic review of annuities.
August 2025 update: This review is historical. See our what we publish[1] page for more information and current views.
Making the right decision when purchasing an annuity is particularly important, as it is usually irreversible and affects a consumer’s income for the rest of their lives.
Who should read this paper?
This paper is directed at firms selling annuities and those who have existing defined contributions pension customers, their representatives and consumer representative groups. Individual consumers may also find the results of interest.
TR14/2 – Thematic Review of Annuities[2]
What was the scope of the review?
We started our thematic review in January 2013 and we:
- Assessed whether and by how much consumers would be better off buying an annuity from the open market rather than their existing pension provider.
- Considered the drivers of provider behaviour, including assessing, at a high level, the profitability expected from their annuity business.
- Commissioned a report reviewing existing research about consumer behaviour and engagement to better understand how this affects shopping around and the choice of annuity. We are publishing the report alongside this review[3].
What were our findings?
Overall, our results indicate that some parts of the annuities market are not working well for some consumers.
We found that 8 out of 10 consumers who purchase their annuity from their existing provider could get a better deal on the open market.
What are the next steps?
Based on this review, we believe that it is appropriate for us to undertake a competition market study into retirement income[4].
Market studies are our new main tool for examining competition issues in the markets we regulate - they allow us to look more broadly at a market to analyse how competition works today, and how it might develop. The results of the thematic review have been used in developing the scope of the market study, and will inform that ongoing work.