The Pensions Regulator (TPR) needs to "beef up" its advice to consumers about alternative to traditional annuities, according to Prudential.
Head of business development Vince Smith-Hughes said headway had been made to encourage members to shop around at retirement through the Association of British Insurers’ compulsory code of conduct.
But, he added more needed to be done to encourage members to look at alternative products as well as different rates.
Smith-Hughes pointed to investment-linked annuities and impaired life annuities as ways to enhance income in retirement, rather than settling for the best rate on a conventional annuity.
His comments come after pensions minister Steve Webb argued that impaired life annuities could mitigate “unfair” rises in state pension age.
Smith-Hughes said trustees should also consider running financial advice workshops for members that include annuities as people with small pots will not be able to afford individual advice at retirement.
A TPR spokeswoman said enabling good member outcomes was “at the heart” of the regulator’s defined contribution agenda.
She said: “We have undertaken considerable work to ensure that trustees are aware of their duty to inform members about their options at retirement, including publishing detailed regulatory guidance that emphasises the importance of obtaining financial advice about their choices, and using the open market option.
“We also support the ABI’s code of practice on retirement choices, which applies to both trust-based and personal pension where the provider sends information directly to members. The ABI templates make it very clear that members can improve their annuity if, for example, they have a medical condition or they smoke.
“We will continue to work with government and industry stakeholders on the OMO review group to seek ways to improve outcomes for members of all work-based schemes.”
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