Pension providers are expected to do more to help retirees shop around before buying an annuity after a new set of guidelines was announced by the Association of British Insurers.
The Best Practice Guide for the Retirement Process sets out the principles pension providers are expected to follow and requirements they must meet to help increase customer understanding of retirement, especially when it comes to buying the right annuity.
The guide makes it clear that pension providers should encourage customers to shop around before offering them the opportunity to buy an annuity.
The customer will be sent all the information they need to shop around four to six months before they retire, with no default automatic annuity offer made until six to 10 weeks before the retirement date.
This will give customers the time and information they need to shop around.
Helen White, the ABI's acting director of life and savings, said: “With nearly half a million people expected to buy an annuity this year, it is hoped the guidance will have an impact on a great many consumers.
“Pension providers have made huge strides in improving how they communicate with their customers during the retirement process. This guide now cements together best practice so that customers can be confident they have all the information from their pension provider to help them make an informed choice and shop around for the best annuity on the market for them.”
