More than half of workplace retirement schemes could improve the literature they send out to members, according to a report published today.

The Pensions Regulator, which regulates all UK work-based pension plans, also found that 30 per cent of the 97 trust-based defined contribution (DC) schemes it assessed had breached retirement disclosure regulations.

It has referred a further 6 per cent of schemes to caseworkers for extensive work on their retirement literature or processes.

The review assessed the DC schemes on their level of good practice, checking their adherence to legislation, the prominence of the open market option (OMO) in their pension documentation and the use of clear English.

Finance experts urge customers to exercise their OMO and shop around for the best deal, rather than to accept the annuity offered by their pension provider straightaway.

The regulator found that 98 per cent of the schemes offered the OMO, although its take-up remained low, at just 23 per cent of DC members.

It will now write to 4,500 schemes across the country, highlighting the findings of the investigation and encouraging trustees to review the pre-retirement literature they send out to members.

June Mulroy, executive director of operations at the Pensions Regulator, said: “Compliance with the legislative requirements is important as a minimum standard but we expect to see adoption of good practice as the norm.

“This will help members to make the right decisions at retirement, which we recognise can make a significant difference to the income they receive.”

Experts estimate that shopping around for an annuity could boost pensioners’ retirement income by as much as 20 per cent.

Laith Khalaf at Hargreaves Lansdown, the financial adviser, said: "Shopping around not only gives investors access to better rates but also encourages them to think about what kind of annuity they should buy - for instance, whether it should be level or escalating. A level annuity starts at a much higher level than one linked to the retail prices index (RPI) but also falls in value as inflation rises. Fixed-rate escalating annuities that rise at 3 per cent a year look a better deal than RPI-linked annuities at current rates, and give you some inflation protection.”

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