When it comes to investing their hard-earned
retirement savings, a study by the Association of British Insurers
(ABI) found that a third of workers in the UK approaching
retirement do not shop around for the annuity product best suited
to their circumstances.

It is a situation the insurance industry body
aims to rectify through a compulsory code of conduct which must be
implemented by its members by no later than 1 March 2012.

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One of the fundamental requirements of the
code is that service providers will be compelled to communicate
clearly to their clients that they are free to use their retirement
savings to buy an annuity from another service provider, if they
choose to do so.

Enhanced annuities

Particular emphasis is also laid on compelling
service providers to prominently highlight enhanced annuities and
the much higher income they can potentially offer to people meeting
certain medical and lifestyle criteria.

Service providers will also have to inform
customers whether they offer enhanced annuities and how to find out
who does.

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Service providers will also be required to
publish their annuity rates and clearly inform clients about how
they can obtain advice and support when selecting an annuity
product from regulated advisers and the government-backed advice
organisations, the Money Advice Service and the Pensions Advisory
Service.

Commenting on the code of conduct, the ABI’s
director general Otto Thoresen said: “These changes are a big step
forward for customers at retirement and were informed by extensive
consultation and consumer research.”

The ABI’s code of conduct was greeted with
particular enthusiasm by Aviva. “This new code of conduct will
significantly improve transparency and facilitate the development
of a healthy, reformed and competitive retirement market place,”
said

Clive Bolton, Aviva’s at retirement director.
“Providers who seek to provide poor value annuities to their own
pension customers will now be faced with greater scrutiny due to
the commitment by the ABI to look at how best to publish all
annuity rates.”