The Association of British Insurers (ABI), which represents many Annuity providers, has launched a new service designed to encourage would-be retirees to shop around for the best Annuity rate.
The ABI’s specimen Annuity rate tables , which forms part of the wider Retirement Choices Code, are not designed to be best buy tables or even an Annuity calculator, but to highlight the options retirees have and the need to shop around for the right Annuity for their own individual circumstances.
Not enough shopping around
Over 400,000 people buy an Annuity each year and concern has been mounting for some time too few people are shopping around for the best Annuity rate or considering an Enhanced Annuity, which could provide a higher income due to health or lifestyle factors.
Whilst the ABI’s tables won’t be updated daily, which has led to accusations that the figures could be misleading and only 12 customer profiles included, they do highlight the poor deals offered by many existing pension providers, with a gap of over 20% between the best and worst Annuity rate.
Speaking about the launch Otto Thoresen, the ABI’s Director General, said: “Increasing life expectancy and an era of low interest rates makes the need to secure an adequate retirement income greater than ever. The industry is determined to do all it can to help people make the right decision to secure the best possible pension. The Retirement Choices Code will help people approaching retirement have the confidence to make the right pensions decision.”
The specimen tables can be found by clicking here .
Following the launch opinion was divided on whether these tables will help consumers. Many industry experts pointed out that the tables are too simplistic, not updated frequently enough, exclude some Annuity providers and ignore other retirement income options, such as Income Drawdown.
However, others believe they will help highlight the difference between the top and bottom Annuity rate and consequently the importance of shopping around.
Our view is that the tables represent a missed opportunity and will be of only limited value to consumers, click here to read why.