A new code from the Association of British Insurers (ABI) will help people approaching retirement better understand their options when it comes to making decisions about their pension income.
According to the ABI:
400,000 people buy an annuity each year, of which; one in four feels they do not fully understand their retirement options; and one in three doesn’t feel informed enough to compare quotes from another provider.
The ABI Code of Conduct on Retirement Choices, which comes into force on 1 March, will see insurers doing more to explain annuity options and encourage people approaching retirement to fully consider and shop around for the best pension option for their needs.
In advance of a person’s retirement, insurers will have to send them information about:
considering the full range of retirement options available combining small pots and shopping around for annuities taking retirement income, including how to provide for dependants, lifestyles or medical conditions shopping around for the right pension deal, including the benefits of doing so and sources of further advice.
The ABI’s director general, Otto Thoresen, said:
“Increasing life expectancy means that many people will be receiving a pension for longer than they were paying a mortgage so the need to make the right decisions at retirement has never been more important. The timely, clear and relevant information provided under the code will significantly increase the number of people reaching retirement with the confidence to make the right pension decision.”