People approaching retirement will now be better informed and given clearer choices under a new initiative implemented on 1st March. The Association of British Insurers Code of Conduct on Retirement Choices will help the 400,000 people who buy an annuity each year to get the best possible pension deal. While most people approaching retirement are aware of their options, one in four people feel they don't fully understand their retirement options, with one in three not feeling informed enough to compare quotes from another provider.
The ABI code of conduct will require member pension providers to:
- Provide clear and consistent communications to ensure customers are able to make informed decisions about retirement income products, and are able to shop around for the most appropriate product.
- Highlight different types of retirement income, particularly enhanced annuities and the potentially much higher income they can offer, and inform customers whether they offer these products.
- Clearly signpost customers to sources of advice and support, both from regulated advisers and government-backed advice organisations such as the Money Advice Service and the Pensions Advisory Service.
- Establish transparency in the annuity market so that it is more easily understandable and accessible to customers, with a clear picture of how individual providers' product offerings fit in the wider market.
- Pension providers will no longer automatically include their own annuity application forms to encourage customers to shop around
- At least two years before retirement providers will encourage customers to consider their retirement options.
- Six months from retirement and again six weeks from retirement the provider will provide information regarding the various options, such as combining small pension pots and shopping around for the best annuity.
To monitor the effectiveness of the Code the ABI will conduct consumer research to assess changes in consumer's retirement awareness and pension purchasing. The impact of the Code will be reviewed in 2014.