LONDON (Reuters) - Britain’s insurers have pledged to help pension savers find the best deal for their retirement, following criticism they have not always done so in the past and the launch of a review by regulators.
The Association of British Insurers (ABI), whose 350 members run some of Britain’s biggest pension schemes, said on Tuesday its members had all signed up to the new “ABI Code of Conduct on Retirement Choices”.
The code requires insurers to spell out options for buying an annuity - which converts pension savings into retirement income - up to two years before an individual retires.
Britain’s Financial Services Authority said in January it would review whether people who buy an annuity directly from a pension provider pay more than those who shop around.
ABI members will contact people approaching retirement with details on how to combine small pension pots, the different ways to take retirement income, and protecting against inflation.
UK insurers have been accused of failing to tell customers that they can shop around for better value annuities from rivals - which in some cases can pay over 15 percent more income for life.
There is an income gap of up to 16.2 percent between the most and least competitive annuities currently available for 65 year-old retirees, financial data firm Moneyfacts said.
The ABI’s code comes amid a prolonged decline in average annuity incomes as insurers pass on a drop in the returns they make on their investments in government bonds.
But independent annuity advisers Annuity Direct say the ABI’s code is not strong enough to protect consumers or encourage shopping around.
“The Code plans to send information to consumers that are superfluous, confusing and unhelpful,” Alan Highman, chairman of Annuity Direct, said in a statement.
In January, it drew up an agreement that would force its members to reveal fees and charges taken from employees’ retirement savings. (Reporting by Sarah Mortimer; Editing by Mark Potter)