The Financial Conduct Authority (FCA) is expected to publish a ruling on annuity mis-selling soon.
It should outline which pension providers are liable (Standard Life and Prudential have been confirmed by the FCA so far) and how any redress scheme will work - we'll update this guide once we know more.
Until then there’s nothing to stop you contacting your pension provider to make a claim, but it may be put on hold until the FCA ruling is published.
It’s expected that most, if not all, providers will contact any of their customers who may be due compensation.
Read on to find out how you could qualify for compensation.
When you choose to buy an annuity, you have the right to shop around for the best deal, rather than just buying one from the company that runs your pension.
Shopping around for the best deal often means you'll benefit from a higher income in your retirement.
The company you save with should tell you about your right to shop around for a better annuity rate, and not automatically sell you one of its own.
You may be entitled to claim compensation if your pension company failed to tell you that you had the right to shop around before selling you an annuity, or if it failed to tell you that you qualified for an enhanced annuity.
If your answer is yes to any of the following questions you may have been mis-sold your annuity.
If you think it’s likely you’ll be entitled to claim, it’s a good idea to hunt down any paperwork you have relating to your annuity so you’re ready to take action.
You'll need to check any documents you were given from your pension company when you retired to see if you bought an annuity.
If you were sold an annuity, you will have received confirmation of this, including a Key Facts Document, before choosing.
Certain people will be entitled to claim for compensation on their mis-sold annuities.
This includes people with health conditions or lifestyles which could have meant they were eligible for an 'enhanced' annuity and have lost out significantly from not shopping around.
Smokers, people who are overweight and those with medical problems tend to find a significantly better retirement income - up to 30% more every year - by arranging an enhanced annuity.
But even if you're a non-smoker and are in good health, you may also have been affected my mis-selling if you weren't told of your right to shop around by your pension company.
Unlike the PPI scandal, where banks have paid more than £40bn in compensation to customers, a significant proportion of victims of annuity mis-selling have since died.
If you're receiving income from a partner’s annuity and your partner should have received more at the time they bought it, you can still claim compensation.
The FCA's review only goes back this far because it issued guidance to firms about how to communicate with customers in June 2008.
The regulator isn't asking firms to review earlier sales, but if you think you may have lost out prior to that date you should get in touch with your provider.
No, the review only covers sales made to existing customers of pension companies.
See our pensions and retirement guides for expert advice on planning ahead through to getting the best income from your pension savings.
Annuities are one of the most common financial products sold to a person upon their retirement. By choosing an annuity, you effectively convert your pension savings into a regular income amount which will then be paid to you on either a monthly or annual basis for the rest of your life.
The level of income provided by an annuity should be based upon the average life expectancy of the person it benefits.
There are certain medical conditions and lifestyle choices (for example, smoking) that can shorten average life expectancy.
In such cases, the level of income received from an annuity should be of a higher amount to reflect the fact that the income may be paid for an overall shorter number of years compared to other people. This is commonly referred to as an enhanced annuity.