Customers will get more help to achieve better outcomes when they turn their pension savings into a retirement income, the Association of British Insurers have announced.
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.
The pensions industry will put a new minimum standard for customers in place, building on work already done through the Retirement Choices Code and acting on the challenges set out in the recent report from the Financial Conduct Authority on annuities.
Under the proposed reforms pension providers must:
- offer impartial advice or guidance to customers, including alternatives to annuities
- help customers compare different annuities
- collect information about the customer’s health and lifestyle, which they can use to shop around for an enhanced rate
ABI members will implement the changes over the next 18 months, with completion scheduled for the summer of 2015.
Ahead of the budget, the pensions industry is also calling on the Chancellor to relax the rules around small pension pots – currently savers can only take their pot as cash if they have less than £2,000 in it.
Otto Thoresen, Director General of The Association of British Insurers, said: “The announcement further builds on the Retirement Choices Code and seeks to ensure the retirement income market is meeting the needs of customers with pension pots of all sizes.
“It is critical to make sure savers have all the appropriate information they need easily to hand to make the best possible choice at retirement. This means changing the retirement process so that shopping around and providing medical information is built into it.”