Consumers wake up to annuity options
New research from the Association of British Insurers (ABI) indicates that consumers on the verge of retirement are becoming more aware of their pension options.
The ABI has been questioning those in receipt of “Wake-up” packs, sent out by defined contribution schemes six months before a due retirement date.
The literature, which has been reworked to improve customer communication, contains information on the options for buying an annuity, including the Open Market Option (OMO).
Seventy one per cent of respondents who read the packs said they gained a better understanding of the choices and the proportion of those aware of the right to shop around for an annuity increased from 62% to 82%.
However, 58% of pre-retireds who remembered receiving a pack had left the page unturned or just skimmed through.
The ABI’s director of life and savings, Maggie Craig, says: “Keeping communications short and simple clearly helps, but the best way to ensure customers get best value from their pension savings is to raise awareness and encourage engagement earlier in their working lives.”
Last month, Aviva launched a television and press campaign that highlights the advantages of shopping around for annuity rates.
The insurer claims that people can boost their retirement income by up to 10% by making an effort, rather than sticking with their current pension provider.
According to the group, nearly 450,000 annuities are taken out in the UK each year but only around 37% are taken out using the OMO.
Category: ABI News
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