20 Apr 2024

Moneyfacts response to ABI annuity initiative for customers

Richard Eagling, Editor of Investment Life & Pensions Moneyfacts:

“Whilst it is encouraging that the Association of British Insurers (ABI) has signalled its intentions to persuade more consumers to shop around to get the best retirement income through its new compulsory code of conduct, it is debatable whether simply stopping pension providers from enclosing an annuity application form in the correspondence sent to policyholders as they approach retirement will have the desired effect.

“Much more work needs to be done to signpost the choices that consumers need to make at retirement and the advantages and disadvantages of the various options available to them.

“The importance of ensuring more customers shop around for the best retirement income available should not be underestimated.

“Forecasts suggest that the growing demand for annuities will continue to soar on the back of demographic changes and the increasing shift from defined benefit (DB) to defined contribution (DC) pension schemes.

“Looking further ahead, the introduction of the Government’s new system of personal accounts in 2012 is expected to generate millions of new pension savers, many of whom will ultimately turn to an annuity to provide their retirement income.

“While average amounts to be annuitized remain relatively low, the priority will be to maximise the amount of income received.

“This will only be achieved if consumers shop around to obtain the best price for their annuity and investigate all of their options such as investment-linked annuities and enhanced annuities.”

Moneyfacts Group
Moneyfacts is the UK’s leading independent provider of personal financial information and our data is used and trusted throughout the financial industry.

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