New research into consumer perceptions and experiences of the annuity market, published today (15 December 2005) by the ABI (Association of British Insurers), has shown that public understanding of annuities has improved. But the ABI is calling for further progress as debate around pensions hots up.

The ABI research showed that competition in the annuity market, and customers’ right to shop around, is delivering higher retirement incomes at both the bottom and top ends of the market. It also identified ways to maintain and build upon this good progress. More consistent advice is needed to help individual consumers get the best value for money, and further efforts are needed to improve education and understanding of annuities more generally.

Helen McCarthy, the ABI’s Head of Pensions and Savings Development, said:

“Our research shows that while consumer awareness of annuities is better than previously thought, there is still work to be done. In particular, more effort should be made to get across the message that people can shop around when purchasing an annuity – very often they will get better value for money by doing so.

“More choice and simplicity in the annuity market will also benefit consumers. The new ABI Statement of Good Practice on Pension Maturities, to be published soon, will smooth the process of purchasing annuities. We are also calling on the Government to build on tax changes from April 2006, and simplify the so-called ‘decumulation phase’ still further.”

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Notes

 1.            Enquiries to:    

         Alan Leaman                020 7216 7440 (Mobile: 07957 482 330)

         Jonathan French          020 7216 7392 (Mobile: 07958 330 480)

         Malcolm Tarling            020 7216 7410 (Mobile: 07776 147 667)

         Lucy Butler                    020 7216 7411 (Mobile: 07712 841 184)

2.            The ABI report ‘Annuities: bonus or burden?’ is available by clicking on the link below. Fieldwork was conducted in March 2005 by IFF Research for the ABI; 500 people who had purchased an annuity within the previous three years were surveyed.

3.            The ABI is the trade association for Britain’s insurance industry. Its nearly 400 member companies provide over 94% of the insurance business in the UK. It represents insurance companies to the Government, and to the regulatory and other agencies, and is an influential voice on public policy and financial services issues. ABI member companies hold up to a sixth of all investments traded on the London Stock Exchange, on behalf of millions of pensioners and savers.