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Retirement

New code will ‘help people get best pension deal’

Joanna Faith
Written By:
Joanna Faith
Posted:
Updated:
27/02/2013

People approaching retirement will receive clearer help and information to get the best possible pension deal under a new initiative to be implemented on 1 March.

The Association of British Insurer’s code will help the 400,000 people who buy an annuity each year better understand their options at retirement, choose the right annuity for their circumstances and shop around for the best deal, through clear and consistent information provided by insurers.

Insurers have faced criticsm in the past for not doing enough to help customers. One in four people feel they do not fully understand their retirement options, with one in three not feeling informed enough to compare quotes from another provider.

The new code will also:

– Provide clear, timely information to help people approaching retirement understand what their options are. At least two years from retirement the insurer will encourage the customer to consider their retirement options. Six months from retirement and at least six weeks from retirement the insurer will send details explaining the various options, such as combining small pots, and shopping around for the best annuity.

– Explain the different ways to take retirement income. This will include providing for dependants, lifestyle or medical conditions that may mean they are eligible for an enhanced annuity and protecting against inflation.

– Encourage shopping around for the right pension deal. The benefits of shopping around among other providers will be clearly highlighted along with sources of further advice. Insurers will no longer include annuity application forms so there will be less chance the customer will buy from the current provider without first shopping around.

Otto Thoresen, ABI director general, said:

“This Code is the latest initiative in the industry’s commitment to helping meet customers changing pension needs. Increasing life expectancy means that many people will be receiving a pension for longer than they were paying a mortgage so the need to make the right decisions at retirement has never been more important. The timely, clear and relevant information provided under the code will significantly increase the number of people reaching retirement with the confidence to make the right pension decision”.