New code to help retirees understand their pension options

 

Individuals approaching retirement are to be given more guidance to help them make an informed decision about their pension options.

Under the new Association of British Insurers (ABI) code of conduct, insurers must provide pension savers with information to help them better understand their options at retirement and the importance of shopping around for an annuity deal.

The new code will require insurers to send a letter to customers two years from retirement to encourage them to consider their retirement options. Further information will then be sent at six months before retirement and again at six weeks.

Insurers should explain the various options and ways to take retirement income, as well as providing advice on combining small pots and highlighting the benefits of shopping around for the best annuity deal.

Commenting, Otto Thoresen, director general of the ABI, 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.’

Meanwhile Darren Philp, director of policy at the National Association of Pension Funds (NAPF), said: ‘The ABI's work is welcome, and an important step forward, but we believe that there is further to go if we are to maximise the chances of people securing the best possible retirement income’.

The code came into effect on 1 March.

This article is for general guidance only.

Please contact Jolliffes 0845 258 1445 or www.jolliffes-accounting.co.uk for further information