Retired workers will be able to "shop around" for new annuity schemes in the same way they can change their mortgage under new plans to tackle "murky" practices among insurance firms, the pensions minister has said.
An annuity is a product you buy with your pension pot that gives an you income until you die. Once you've purchased an annuity, you can't change your mind (see our Annuities guide for tips on getting the very best retirement income).
But Steve Webb wants to end the "lottery" in which many pensioners are trapped in potentially poor-value schemes until they die.
The Liberal Democrat MP accused insurance firms of being "murky" and insisted practices need to be transparent. He told The Sunday Telegraph his new plans will also address "hidden charges" from insurers to give retired workers a better deal.
Webb said: "When you take out a mortgage, in a few years if rates change you can switch your mortgage. But when you take out an annuity, that's it – for life. This could easily be for a quarter of a century.
"Why shouldn't you be able to change your annuity provider so a few years later somebody else could offer you a bigger pension?"
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Bewildering variety of annuities
Webb's announcement comes after an official advisory panel found retirees are often put off from comparing deals because they face a bewildering variety of options in the UK's complex £12 billion annuities market.
The Financial Services Consumer Panel last month found that while product complexity had increased, professional advice was harder to find, and retirees were increasingly buying annuities on the open market through "non-advice" websites and "losing valuable consumer protection".
It called for an urgent reform of the market.
New annuity business, which currently sees 400,000 sold each year, is expected to double over the next few years due to the impact of maturing pension plans and the introduction of auto-enrolment for private sector workers.