Thousands of pensioners could be in for a compensation windfall because they were not informed of the potential of receiving a higher income by shopping around for an annuity, according to pensions law firm Sackers.

The Telegraph reported that procedural failures by scheme trustees, pension providers and independent financial advisers (IFAs) who arrange annuities could lead to complaints if they failed to make retirees aware of their right to shop around for a better deal.

Steve Lowe, marketing director of Living Time, said: “Evidence continues to surface that shows many customers feel cheated after being placed into a conventional lifetime annuity and not realising they had access to other retirement income products that were far more appropriate to their needs. The new Pensions Minister has the opportunity to change the law to provide improved protection for retiring customers.

“Customers may feel cheated out of securing the most appropriate retirement income product if they have not received clear information from their pension provider outlining the range of options available. We come across too many customers, after they have committed to a product that locks them in for life with no opportunity to reverse that decision, who plainly did not feel they had been told other options were available that could have provided improved income or greater flexibility.”

Lowe called on Pensions Minister, Steve Webb, to replace the Open Market Option (OMO) with a new mandatory process that would ensure customers shop around for an annuity, ensuring that they do not feel “cheated” by their pension company, employer or financial adviser for not telling them there are other options.

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