In the United States, the 401(k) retirement savings plan is also an employer-sponsored retirement savings plan. It lets workers save and invest a piece of their pay check before taxes are taken out. Employers can make matching contributions to the plan or contribute a percentage of an employee's salary.
While employers choose the fund it's invested in, consumers are able to direct their contributions into a selection of investment productions.
The open market
The study found that U.K.consumers shopping around for an annuity – rather than simply taking what's on offer from their pension provider -- could increase their retirement income by 6.7 percent a year.
But while shopping around can get consumers a better deal, the annuity market is still lacking in competitiveness, the FCA said. In 2012 only six firms offered standard annuities on the open market and of these just three made up 97 percent of the market share.
(Read more: Pension struggle may have peaked: Report)
Those with smaller pension pots were the biggest losers from the U.K.'s pension system. The size of their pots left them less able to shop around and switch.They also had a smaller pool of providers to choose from.
In 2012, 27 percent of annuities sold to existing pension customers were for fund sizes of less than £5,000 ($8,300).
Moving forward, the FCA intends to look into ways of increasing the number of consumers who shop around as well as studying why the market is so concentrated.
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