ABI acts on annuities
by Gill Montia
Story link: ABI acts on annuities
The Association of British Insurers (ABI) has played a prominent role in the Government’s Open Market Option Review, details of which were published earlier this week.
The review sets out recommendations to reform the way in which people buy annuities and according to Maggie Craig, the ABI’s Director of Life and Savings, “not enough people are aware of all the options they have”.
Ms Craig is keen for information about buying annuities to be presented clearly so that consumers make use of their right to shop around, rather than buying an annuity from their pension provider.
The ABI is expanding its Customer Impact Scheme to incorporate good practice guidance on pensions maturities and transfers.
It will also be working with member companies to improve methods of converting pension savings into an annuity.
These changes should encourage the development of speedier means of beginning payments.
The Financial Services Authority will be closely monitoring firms who are slow in transferring pension funds to a rival annuity provider.
The regulator introduced rules to compel pension providers to inform customers about the open market option in 2002, however, recent research suggests that the number of people shopping around for an annuity has remained low.
The FSA is dissatisfied with this situation because retirement income can be increased by up to 20% by simply researching the market.