Michael Johnson's briefing note A market-orientated solution to the problem with annuities aims to solve the annuities problem by establishing a new clearing house. The paper argues that the current annuities market is unfair and that a new means of selling annuities would improve the market for retirees.
The note is making an impact on a number of key financal and pensions websites as can be seen below. Click on the website names to view the articles in full.
"Centre for Policy Studies research fellow Michael Johnson (pictured) says insurers should develop a clearing house system within which all annuity providers would participate.Under Johnson’s proposals, a standard form would be sent to the clearing house, via the pension pot administrator, around three months from retirement detailing any health issues and the type of annuity required. Providers would then bid for annuity business on a daily basis." - Money Marketing
"Ministers and trade unions have a rare opportunity to join forces to tackle "staggering" inefficiencies which threaten the sustainability of local government pension funds, according to a leading expert.
Centre for Policy Studies research fellow Michael Johnson is lobbying ministers to facilitate the merger of the existing 101 separate local government pension scheme (LGPS) funds into five independently-managed regional schemes. Johnson argues that the move would reduce administration costs by up to 90 per cent, resulting in improved benefits and lower increases in contribution rates." - Public Service.CO.UK
"If the financial services industry failed to establish an operating annuities clearing house within two years, the government should create the brokerage service itself, said Johnson. Johnson’s proposal follows calls last week by Tory MP David Mowat to create a national low-cost annuity provider, similar to the National Employment Savings Trust (Nest), the government backed low-cost provider of pension savings." - City Wire
"The Centre for Policy Studies has said that rather than a new code of conduct, the industry should create a ‘clearing house’ in which all annuity providers participate...By using the open market option and shopping around to other providers, most would get a much more generous income; especially those with medical issues who are eligible for enhanced annuities which typically pay around 20 per cent more than a conventional annuity. At a time when retirement income has plummeted, causing many to lose faith in the whole retirement savings system, providers are aware that they need to do something to increase incomes." - PensionCalculator.Org