Investors pay into their pensions for decades in the expectation that they can enjoy a long retirement without financial worries.
Yet the final arrangement – the purchase of an annuity in most cases – is not being honourably handled by those very insurance companies to whom they have entrusted their money.
This affects both personal pensions and employee-accumulated plans whose holders convert their retirement pots into a guaranteed income for life.
Since 2002, insurers have had to alert customers four to six months before retirement of the option to shop around for an annuity other than their own.
Six weeks prior to the date they cheekily send out an application form for their in-house annuity and a calculation as to the sum that should be available.
This is a market worth a staggering £11bn annually and the fat cat insurers are holding on to the money with their claws.
Not content with years of under-performance, they withhold the valuable advice that many potential annuitants would gain extra money by purchasing an ‘impaired’ annuity.
It is so easy to tick a box on the form sent from the trusted pension provider.
Almost certainly, the annuity offered will make no enquiry as to whether the applicant has or does smoke, whether they have any health conditions like heart problems in the family, and if by lifestyle they are over- weight.
An enquiry might produce a response, which could mean a significantly higher annuity payment – a large sum every month for life.
The National Association of Pension Funds calculates that individuals are losing out on £1bn a year.
One-third do not enquire beyond their pension provider. Yet by shopping around, an annuity can be boosted by up to 16 per cent.
The major insurers up to such activities are Aviva, Prudential, Resolution and Standard Life.
From March, the tick-box reply form will not be sent but insurers may still keep quiet on the true benefits that could come to those who have saved with them for their future.