LONDON, March 18, 2013 /PRNewswire/ --
Annuity providers sign up to a new agreement aimed at increasing customer awareness.
On 1 March, a new code of conduct from the Association of British Insurers (ABI) on retirement choices came into effect. The code aims to help ensure that people approaching their selected retirement age have all the information they need to make an informed decision. For pension annuities, it's hoped that the code will raise customer awareness that better annuity rates and income for life could be available as a result of health issues and shopping around.
The Open Market Option (OMO) for annuities was introduced 35 years ago to give people the right to 'shop around' for the best annuity rates and buy from any provider. Today, a majority of people still buy their annuity from their pension provider and as Tim Gosden, Head of Strategy for Individual Annuities at Legal & General explains; many could be missing out on income for life.
"Whilst awareness of the OMO appears to be growing and sales figures indicate more people are buying from other providers, the extent to which people are actually shopping around is still unclear. Many customers do shop around and compare annuities before buying from pension providers that are also competitive annuity providers offering enhanced rates for health issues. However income offers can vary significantly and customers can't afford to assume that their pension provider does offer competitive annuity rates.
Tim added; "The code has prompted providers to review their written and verbal communications, to help ensure that customers are aware of their retirement income options. Making an informed decision when buying an annuity is particularly important because a pension annuity is for life and can't normally be changed. Also people with smaller pots may find it difficult to get independent financial advice, so all retirement income providers need to help ensure that their customers are aware of their options and where they can go for advice and support."
SOURCE Legal & General Annuities