Provider ‘wake-up’ packs to pension clients approaching retirement about how they can find the best annuity rates arrive far too late, are too complex and should be scrapped altogether, leading retirement firm, Just Retirement says. They state that the packs, recommended by the Association of British Insurers (ABI), should be replaced by a “much clearer” series of communications between insurance companies and consumers starting at a much earlier point in the pre-retirement process.
They are, in fact, calling for the establishment of an independent communications “czar” to police the necessary guidance offered by ceding companies. Failure to comply with appropriate guidance should result in the business being automatically put through an Open Market Option (OMO) process to ensure alternative competitive annuity rates are considered, it recommends.
According to ABI research, 70% of pensioners who read the ‘wake-up’ pack said it gave them a better understanding of annuities and other options at retirement, and awareness of the right to shop around increased from 62% to 82% after reading the pack. However, Just Retirement’s David Cooper states that they are very disappointed at the pace and nature of the pension industry’s progress on this issue. Despite several industry initiatives, including those from the ABI, it is now clear the current process is not fit for purpose.
The provider has set up a focus group to assess these ‘wake-up’ letters, which concludes that there was too much information for consumers to digest and some were overlaid with what could be termed ”threatening” legal disclaimers, warnings and some even had short deadlines. Respondents felt strongly that insurance companies were more interested in protecting their own financial positions than informing their customers properly about their annuity buying options.
