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All change for annuities as FCA plans to warn savers of rip-offs

Last updated: 15:30 26 Mar 2015 GMT, First published: 16:30 26 Mar 2015 GMT

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In the latest bid to offer Britain's savers a fairer deal and not get ripped off, financial watchdog the FCA has unveiled new changes to annuity products.

That's where a pot of pension money buys a regular annual income.

Under new plans, firms will have to rank their products against fellow providers.

They will therefore be forced to admit when the annual income they offer is poor-value compared to other deals.

In London some of the biggest UK pension providers saw shares fall in early deals today. Prudential (LON:PRU) lost 3.82% to 1,675.5p, while Legal & General (LON:LGEN) shed 2.54% to 283.6p. Standard Life (LON:SL.) eased 1.08% to 474.7p.

Research has shown that some pensioners could be missing out on as much as £1,000 a year, just by sticking to the same provider.

It comes amid the well-documented huge pensions shake-up, which comes into effect on April 6.

Customers can now, if they wish, ignore the annuity route altogether and take the pension pot in one hit, as a cash lump sum.

The FCA's director of strategy and competition Christopher Woolard said: "The retirement income market is set for the biggest change in a generation.

"Over the next 12 months we want to ensure that the market is fit for purpose in the new landscape.

"We received considerable support for our proposals and we will be working with Government and the industry to implement all of our recommendations so that consumers can have confidence that they are getting the best possible outcome when making decisions on their retirement income."

The regulator expects its recommendations to be implemented by 2016, following a wider review of rules this year.

It is also reportedly working with the government to develop a so-called "pensions dashboard"- allowing people to see all their pots in one place.

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