Compensation culture 'leads to inadequate pensions Mel Duffield, head of research and strategic policy at the NAPF, said: "Too many people are still at risk of failing to make the right choices and get the right [type] of annuity at the best price. As they approach retirement what they really need from their employers is more support and advice. But at the moment there are market barriers that stop that happening more widely. People should automatically shop around for the best annuity when they retire, and employers and pension trustees can do more to make this happen. The decisions around how to turn a pension pot into an income in retirement are baffling. Savers need help from an independent source to ensure they understand the options and make sensible choices. Many more people will join this type of pension scheme, called "defined contribution," over the next few years because a new law requires employers to enrol all their workers into a pension automatically, relying on inertia to stop them leaving. Gregg McClymont MP, Labour's shadow pensions minister, said: "More and more people are waking up to the scandal of annuities rip-offs, but ministers are still sitting on their hands. For changes to the state pension to really work, the private pensions system must deliver value for money. Savers can lose a fifth of their pension income because the market simply isn't working. Ministers must now act on private pensions and ensure that there is fairness in the system - including in the purchase of annuities. It should be part of the duties of pension schemes to direct their savers to the best independent annuity brokerage service available or to offer such independent brokerage services themselves. Separately, members of collapsed pension schemes could receive more from the backup fund in future following an announcement from the Department for Work & Pensions that it will raise the cap on payouts. The cap on compensation paid by the Pension Protection Fund is to be adjusted to give more money to long-serving employees with large pension pots. Under existing legislation benefits for pension scheme members who have not reached normal retirement age are capped at £31,380 a year. But the DWP said the cap would be increased by 3pc for every full year of service above 20 years completed by an employee.