The Association of British Insurers will introduce a compulsory code of conduct which will force providers to remove the annuity application form in the communications they send to customers.
The initiative has been announced as part of ongoing efforts by the industry and Government to increase the number of people who shop around at retirement.
The move will stop consumers from automatically rolling over their savings to an annuity with their current provider. The trade body says the new code will also ensure consumers receive all the information they need to shop around in one place.
ABI director of life and savings Maggie Craig (pictured) says: “The Association of British Insurers believes all consumers should shop around to maximise the income from their pension savings. However, not enough people shop around currently. This new industry initiative has been developed to make a significant difference to people’s retirement outcomes.”
Treasury financial secretary Mark Hoban says: “The ABI’s announcement can form an important part of a wider package of measures to encourage consumers to get the best from the annuity market, which the Government is working with the pensions industry, advisers, and consumer groups to deliver in the coming months.”
Hargreaves Lansdown head of pensions research and Pension Income Choice Association chairman Tom McPhail says: “This is a welcome concession from the ABI and an indication we can move towards a more complete solution.
“However, what they have proposed today falls a long way short of what we would regard as an acceptable outcome. We will continue to work with the DWP, the Treasury and the ABI to put together a more far reaching solution.”