The Association of British Insurers (ABI)has issued further guidance for pension providers on improving ‘wake-up' packs to ensure more people read them.
‘Wake-up' packs aim to help people with defined contribution pension policies decide how to take their benefits, including details on the right to shop around using the Open Market Option (OMO) and the different types of annuity available.
However, an ABI review earlier this year suggests customers often fail to read the packs, with as many as 58% who remembered receiving the information either leaving it unopened or just skimming through it.
The updated guidance encourages clear prompts for customers about the importance of reading the wake-up pack in the run up to retirement.
It also puts more emphasis on the importance of shopping around, and encourages providers to clearly lay out the timeline for taking benefits, whether through OMO or not.
The Pension Advisory Service's online financial planner will be promoted as a key pre-retirement tool, and providers will be encouraged to speak to customers at an earlier stage than the usual four or six month wake-up pack.
New standards to improve OMO transfer processes also feature in the new guidance.
Maggie Craig, the ABI's acting director general, says: "This new guidance shows the pensions industry's determination to improve customers' experiences when securing a retirement income, and provide information in a way people understand.
"The 2008 guidance led to major improvements in the quality of providers' pre-retirement communications and we expect this guidance to raise standards still higher.
"We have listened to the views of consumers, the industry and other pensions experts to identify how best to convey key information and encourage people to read these packs.
"This new guidance will help ensure people get clear, valuable and understandable information at the point when they are making hugely important decisions about how to turn their pension savings into an income in retirement."
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