The Association of British Insurers has tabled proposals which will force all annuity providers to publish information on the rates they offer to customers.
Last week, the trade body set out plans to conduct a regular rate survey of members as part of its shopping around code of conduct, due to be launched in March.
The survey will set 12 hypothetical customer profiles and ask what income each of these would receive from an annuity.
The 12 profiles will be based on a combination of age, single or joint annuity, fund value, health, postcode, escalation, guarantee period, dependant age and payment period.
Providers with single-tie annuity deals or who offer a panel of providers will need to explain the arrangement, name the default annuity provider or panel member, and refer user’s to the relevant provider’s survey responses.
The results of the survey will be published on the ABI website every two months.
The ABI says: “The requirement to respond to the survey will be part of the ABI’s compulsory code of conduct. It will apply to all ABI members providing annuities and/or pensions, regardless of whether they are currently competing for annuity business or not.”
ABI director of life, savings and protection Stephen Gay says: “For the first time we will be publishing rates of companies who only offer rates to existing customers as well as companies competing on the open market.
“Buying an annuity is one of the most important financial decisions people make and shopping around for the right one can make a significant difference to people’s retirement income.
“Making the market more transparent is a further step in helping people with this decision. We want to get this right so are launching a consultation on our plans and welcome feedback from a wide range of stakeholders and insurance companies.”
Pensions minister Steve Webb says: “This move by the ABI to improve the transparency of annuity rates is a step in the right direction. Pensions need to be simple and clear so that people can engage with them.I am determined to ensure that every pound put aside is turned into the maximum amount of pension.”