ABI annuity rates mailouts rule change 'does not go far enough'
21 December 2011
The Association of British Insurers (ABI) has been criticised for its approach to ensure individuals seeking an annuity get the best possible deal.
It was revealed by the organisation it is set to change rules regarding unsolicited mailouts to consumers, but Richard Parkin, head of proposition at Fidelity's defined contribution and workplace savings business, claimed this does not go far enough to protect potential clients.
The ABI has called for providers to be forced to give details about enhanced annuities, even if they do not offer this type of product themselves.
But Mr Parkin stated the body should instead be campaigning for these unsolicited mailouts to be banned entirely, due to the fact this would give consumers a better chance of getting a good deal on the annuity rates they decide to go for.
"We are concerned that these [proposed rules] are not prescriptive enough to remove bias to the products offered by the customer's existing provider," he said.
Mr Parkin added: "There is nothing wrong with sending illustrations on customer request but we believe that unsolicited own rate illustrations simply cannot be in the customer's best interest."
Tom McPhail, of adviser Hargreaves Lansdown and chairman of the Pension Income Choice Association, told the Daily Express more needs to be done in order to ensure consumers are getting a fair deal on their annuity, although he accepted awareness of the sector is growing.
Maggie Craig, director of life and savings at the ABI, claimed the body has worked hard with annuity providers that are members of the group to encourage people to shop around when considering an annuity.
Jason Ashman, chartered financial planner and director of Chatfield Private Client, recently said a lot of older people forget an annuity is one of the options available to them for their retirement planning.
He added many older individuals are leaving it too late to plan for their retirement, which could leave them short of money once they give up work and have to start paying care bills.
Another way to raise funds for retirement could be to use the equity release calculator from Key, which could help homeowners aged 55 and 95 unlock money from the value of their property.