Britain's financial watchdog will investigate whether people locked into some 30 million pension plans sold by insurance firms in the 30 years after 1970 are treated fairly compared with new clients.
Shares in Aviva, Legal & General, Prudential, Resolution and Standard Life fell on speculation the probe could lead to changes that affect the profitability of the products.
The investigation is the third blow in two weeks for the industry.
The UK government said last week retirees would no longer be forced to use pension pots to buy annuities - a major source of insurers' income - and yesterday announced a cap on management charges for some workplace pension schemes.
The Financial Conduct Authority's (FCA) investigation unveiled today relates to about £150 billion of savings policies sometimes described as "zombie funds".
These are closed to new investors and typically owned by elderly people who might have forgotten about them.
The watchdog is concerned these savers are being treated as a captive market because of costly penalties for withdrawing early or stopping further payments which were built into these policies, written before 2000 when interest rates and expected returns were higher.
"These accounts have been closed for many years in some cases, but there are still valid issues to be looked at around the question of the service that consumers receive in relationto those accounts," the FCA said in a statement.
"Are they getting the right information? Are they getting the right level of service? Are these investments still appropriate?" the watchdog added.
The FCA was due to announce the probe in its annual business plan to be published on Monday. But an interview with a senior FCA supervisor in the press today outlining the review sent shares in insurers tumbling, prompting requests from the industry for the watchdog to bring forward its announcement, which it did some two hours before the stock market close.
The FCA said the review wouldn't look at sales practices - such probes have led to hefty fines - and it was not looking to apply current standards on old policies, such as on exit charges.
The UK government is seeking to encourage people to save for old age at a time when public coffers are stretched and people live longer.
Finance minister George Osborne announced earlier in March that retirees would not be forced to buy an annuity with their pension pots, the biggest shake-up in pensions in nearly a century.
Then the government said yesterday annual management charges on workplace pension schemes that automatically enrol employees would be capped at 0.75% from April next year to "end rip-off pension charges".
The FCA review will start this summer and is due to be concluded by the end of the year.
Analysts said any ban on so-called exit fees which, in extreme cases, eat up half the savings pot, would be a heavy blow for insurers.
There are 30 million such funds in existence, dating back to the 1970s, but the FCA will only look at a selection of them.