Pension providers knuckle-rapped over annuities

by Gill Montia

Story link: Pension providers knuckle-rapped over annuities

Pension providers are being urged to improve the services they offer to their annuities clients.

According to the Association of British Insurers’ (ABI) Pension Maturities Statement of Good Practice, pension funds should be sent to annuity providers within 14 days of a person’s retirement.

However, latest research from the Prudential Retirement Income Panel indicates that many pension providers take considerably longer.

Commenting on the findings, Helen White, assistant director to the ABI, says: “Service standards are voluntary. We cannot force companies to adhere to these standards. If we don’t make significant changes voluntarily, the government will in a few years impose changes.”

Prudential’s panel of retirement and pensions savings experts is also recommending that providers examine how they explain annuity options to consumers who are approaching retirement, highlighting a specific need to encourage consumers to learn how annuities work.

Gary Shaughnessy, Prudential Retail Life & Pensions managing director says: “People are making decisions today, thinking about their current situation without considering what it might be in 10 or 15 years time. This issue needs to be addressed or we’ll find pensioners living longer on ever reducing incomes.”

Meanwhile, the National Association of Pension Funds is recommending that pension funds join forces to make a legal challenge to HM Revenue & Customs and seek exemption from VAT.