Last month saw Tesco announce that it will provide an annuity comparison service. The service, if approved by the FCA, will be an online comparison service.
Annuities are created as a means to take the benefits from a pension. Instead of using a drawdown arrangement, where income is drawn from the investment in the pension, the annuity provides a guaranteed income for life. For many people this can be an excellent way to produce a guaranteed income in retirement. For others it can be a bad experience if they are locked into low rates of return, or if they die early and the money disappears.
Comparing the companies that provide annuities is a sensible thing to do, because the rates vary considerably from one company to another. Nevertheless, there are many such comparison services, and virtually all IFAs provide the service through their own internal research systems, so there is little to see that Tesco can offer other than visibility.
If the entry of Tesco to the market means that more people do the required comparison, our only concern is that there will be no advice setting out if it is the right type of annuity.