The consultation follows the publication, in March this year, of the ABI Code of Conduct on Retirement Choices, which requires ABI members to provide clear and consistent communications to their customers in the run-up to their retirement.
As part of the Code, the ABI will be publishing a range of annuity rates available to help customers understand how the products of individual providers fit into the wider annuity market. This will include both the rates of providers competing for customers on the open market and those of providers offering annuities only to their existing pension customers. To make sure we get this right we are launching this consultation on our proposals and welcome feedback from a wide range of stakeholders and insurance companies.
Stephen Gay, the ABI's Director of Life, Savings and Protection said:
"ABI members are committed to making it easier for consumers to shop around for the best annuity deal as they approach retirement. For the first time we will be publishing rates of companies who only offer rates to existing customers as well as companies competing on the open market. Buying an annuity is one of the most important financial decisions people make and shopping around for the right one can make a significant difference to people's retirement income.
"Making the market more transparent is a further step in helping people with this decision. We want to get this right so are launching a consultation on our plans and welcome feedback from a wide range of stakeholders and insurance companies
Steve Webb MP, Minster for Pensions, said:
"This move by the ABI to improve the transparency of annuity rates is a step in the right direction. Pensions need to be simple and clear so that people can engage with them.
"I am determined to ensure that every pound put aside is turned into the maximum amount of pension."
ABI propose to conduct a regular survey of all ABI members offering annuities, setting out a number of typical customer profiles and asking what income each of these would receive from an annuity.
This information will then be published and made available to consumers via the ABI website, along with other information about the providers, such as whether they are offering guaranteed annuity rates, and whether they refer pension customers to an annuity provider or a panel of annuity providers.
The consultation will run until Monday 3 December. To participate please visit the ABI website.
John Wilkinson, Nationwide's head of protection and investments, commented, saying:
"Those approaching retirement are facing difficult times and we want to help customers obtain the best income they can. That is why we whole-heartedly welcome the ABI's consultation on the transparency of annuity rates.
"Buying an annuity is one of life's key financial decisions. After all, it will determine if people have a comfortable retirement or not. That is why it's vital to shop around and not just take the first offer on the table. However, knowledge is key to shopping around in any walk of life, and the same applies to annuities. If rates aren't clear and transparent, people could potentially lose out on thousands of pounds of lost retirement income."
Philip Brown, LV= Head of Retirement Propositions, also commented:
"LV= fully supports this proposal from the ABI. One of the most important decisions people make is about how they structure their income in retirement and we have already seen a rise in the number of people shopping around to get the highest annuity rate possible. We believe that making annuity rates public will make it easier for more people to shop around and make an informed decision. This can only help people select the product which best suits their needs."
