11th March 2014
Pension providers will have to do more to help retirees turn their pension savings into a retirement income, under reforms announced by the Association of British Insurers (ABI).
The pensions industry will introduce a minimum standard for customers to ensure that people understand their options at retirement and have the opportunity to shop around for the best annuity if they decide to purchase one.
Under the reforms pension providers must:
- offer impartial advice or guidance to customers, including alternatives to annuities
- help customers compare different annuities
- gather information about the customer's health and lifestyle for enhanced rates.
Otto Thoresen, director general of the ABI, said:
"The announcement further builds on the Retirement Choices Code (RCC) and seeks to ensure the retirement income market is meeting the needs of customers with pension pots of all sizes."
The changes will be fully implemented over the next 18 months, with summer 2015 the targeted completion date.
Reaction from the pensions industry
Spokesmen for Aviva and Legal & General both said that they were in full support of the ABI's reforms.
However Richard Jones, annuity and protection director at Scottish Widows, said that "improved consumer education and meaningful regulatory change" were also needed to deliver a more customer-focused process.
Pensions expert and former Government adviser Ros Altman said there was "a lot more that needs to be done."
"Despite years of promises and initiatives to raise standards, customers are all too often treated appallingly.
"The reforms are needed immediately, not in 15 months' time," she wrote on her blog.