The mandatory code of conduct on retirement choices for all Association of British Insurers (ABI) members, set to be enforced from 1 March, must go further to better help consumers, annuity campaigners have said.
The ABI said the code, launched at an event in London this morning, had been put in place to better help the 400,000 consumers who reach retirement age this year get the best deal on their retirement income. Part of the policy will see the body publish all its members' rates online to give consumers more insight into the market.
However, other players in the annuity space called for it to go further.
Campaign group Pension Income Choice Association (PICA) said the code must be supported by further developments in promoting good retirement incomes for investors.
Chairman Tom McPhail said: "PICA is making good progress with the development of an intermediary directory to provide a single website where investors can go to find a suitable financial intermediary to help them shop around for their retirement income.
"We are continuing to work with technology providers and other stakeholders such as government departments, consumer bodies and trade organisations to deliver a solution which will meet everyone's requirements. We expect this to be up and running within a few months.
"We support the ABI's work on rate transparency, we see this as vital in promoting consumer confidence and ensuring that the risk of consumers buying an uncompetitively priced annuity is minimised."
Stephen Lowe, management board member of PICA and group external affairs director at Just Retirement added: "The code delivers a significant reform to the way life insurance companies engage with and sell annuities to their existing customers.
"Much stronger protection is now in place to stop customers sleepwalking into in inappropriate product. However, there are c. 2.5 million customers in trust‐based, occupational defined contribution pension schemes who are not protected by these changes. The Pensions Regulator and the Department for Work and Pensions must put in place the same standards to ensure these pension members are not provided with a second division service."
McPhail called on the National Association of Pension Funds to do more in promoting shopping around among its occupational fund members.
"With auto‐enrolment gathering pace, there is a strong argument to make a proper at‐retirement shopping around process a mandatory requirement for all auto-enrolment schemes."
The ABI code requires its members 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 much higher income they can potentially 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 with the wider market.
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