Following a review, the FCA said this morning it will carry out a deeper study which
will have wider implications as to how the market operates.
The FCA said its work so far paints a picture of a "disorderly market".

Among its headline findings were:

• Of those who do not switch, eight out of ten people could get a more generous retirement income by shopping around and buying an annuity from a different provider
• On average the benefit of switching is equivalent to an extra £1500 saved into a pension just before retirement
• This situation is worse for people with small pension pots (less than £5000 saved at retirement) – they have less choice when shopping around as only a handful of providers offer them annuities.
• One in six people could increase their retirement income by more than 10% if they changed provider.

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Martin Wheatley, the FCA's chief executive, said: "The need to get an income in retirement unites us all.
"But once you've bought an annuity you can't change your mind.
"For most people getting the right annuity could mean the equivalent of an extra £1500 in savings – so we need to understand why they aren't shopping around and switching.
"But this isn't true for everybody; our research showed that there is virtually no market whatsoever for people with smaller pension pots.
"This means that for those people who need to make every penny of their pension count, the market has closed the door on them.
"There should be competition across the entire market, not just for those with the most money."

The FCA found that for a pension pot of £17,700 (the average size in this review), buying an annuity from a current pension provider would return an average annual income of £1030.
However by shopping around for a better rate and switching provider, that annual income would increase by 6.8%, or £71 to £1101.
For people with severe health conditions the figure is potentially much higher.
The FCA's competition market study will begin to report findings this summer.