Annuities Code of Conduct Launched

At last the Association of British Insurers has launched its much heralded Annuities Code of Conduct. This was first mooted in the autumn of 2011 and was designed to make the whole process of saving for and buying an annuity more transparent. It is scandalous to think that this was not the case for prospective retirees, and that many sharp practices existed. The compulsory Code launched today must be implemented by March 1st 2013. It has been a long time coming and has arrived not a day too soon.

So what changes might someone about to retire expect to find under the new guidelines? The openness for one thing is a great step forward. Now people will have all the information they require so that they can make an informed choice about the annuity plan which will best suit their needs.

One area which urgently needed attention was enhanced annuities. This is where a pensioner is entitled to an annuity which pays a higher rate. This is generally where an individual has an underlying health problem which may mean that they die earlier, in effect earning less from their annuity. It also covers people who have underlying issues as a result of being a heavy smoker, drinker or user of drugs. Not all pension providers deal with enhanced annuities and what was happening was that unscrupulous companies were not informing their clients of enhanced annuities, therefore effectively restricting their pension amount and condemning them to a lesser pension.

Now all this has to be above board and prospective purchasers have to be made aware of all that is on offer, whether the company itself offers that service or not. People are to be actively encouraged to shop around, to search the market and be pointed in the direction of an independent advisor if this is required. No longer should anyone feel obliged to remain with their existing pension company, whether they have saved with them for twenty years or more, it is acceptable to take your pension pot and put it elsewhere so that it works for you.

Today’s announcement is great news for the little man, at the expense of some unscrupulous companies.