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ABI consults on improving annuity rate transparency

Open-access content Thursday 8th November 2012 — updated 5.13pm, Wednesday 29th April 2020

Plans to make it easier for people approaching retirement to get the best deal when they turn their pension pot into an annuity have been published for consultation by the Association of British Insurers.

Under the proposals, the ABI would conduct a regular survey of all its members who offer annuities, asking them what income a range of typical customer profiles would receive from an annuity. This information would then be published online, with other information about the providers, such as whether they offer guaranteed annuity rates and whether they refer pension customers to an annuity provider or a panel of providers.

A requirement to respond to the survey would be part of the ABI's Code of Conduct, which was launched in March with the aim of increasing transparency in the annuity market.

Stephen Gay, director of life, savings and protection at the ABI, said: 'ABI members are committed to making it easier for consumers to shop around for the best annuity deal as they approach retirement.

'For the first time we will be publishing rates of companies who only offer rates to existing customers as well as companies competing on the open market. Buying an annuity is one of the most important financial decisions people make and shopping around for the right one can make a significant difference to people's retirement income.'

The plans were welcomed by pensions minister Steve Webb, who said: 'This move by the ABI to improve the transparency of annuity rates is a step in the right direction. Pensions need to be simple and clear so that people can engage with them.

'I am determined to ensure that every pound put aside is turned into the maximum amount of pension.'

Joanne Segars, chief executive of the National Association of Pension Funds, said the proposals were a step in the right direction. But she added: 'We believe that more can be done to help members to shop around for the best annuity, including making advice and support services part of the scheme itself so that there is a true "default" Open Market Option in place.'

The consultation, which can be found here, is open until December 3.

This article appeared in our November 2012 issue of The Actuary .
Click here to view this issue

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