The Association of British Insurers has published research of consumer annuity buying patterns which shows 91 per cent of annuity purchasers were aware of the option to shop around, but only 63 per cent considered switching provider.
The ABI has commissioned Optimisa, an independent research organisation, to carry out an in-depth study of annuity buying behaviour to provide a baseline against which the success of its compulsory retirement choices code of conduct, launched in March this year, code can be measured.
The research shows around 30 per cent of annuity purchasers chose to change provider after shopping around, with 35 per cent seeking help from a financial adviser.
Financial advice had a greater impact on consumers than other sources of information, with 44 per cent saying the information from an adviser encouraged them to consider alternative providers and annuity types.
Some 77 per cent of the pre-retirees surveyed said they had either a basic or good understanding of the different types of annuity available, with the remaining 23 per cent claiming they know “little” or “nothing” about different annuity options.
ABI director of life, savings and protection Stephen Gay says: “While there are a lot of positives, there is plenty of room for improvement from this baseline.”
Hargreaves Lansdown head of pensions research Tom McPhail says the Government should focus on improving retirement outcomes for trust-based scheme members.
He says: “For auto-enrolment to succeed the Government needs to ensure that all defined contribution pension investors benefit from a comprehensive shopping around process.”