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ABI: Why our Annuity Window does not undermine advice

ABI director general Otto Thoresen responds to a blog from Annuity Direct chief executive Alan Higham.


I know that Alan and I can at least agree that we both want good outcomes for pension savers, although it is clear that we disagree on the best approach to achieve this.

The first point I have to make is about advice. The new resource encourages people to seek advice, and signposts people to where they can get this advice. It sits within the Retirement Choices Code, a compulsory Code which covers ABI members, which has as its purpose helping people understand the alternatives open to them at retirement and motivating them to take action as a result.

The second point relates to which firms appear in the tables. By definition, since this is part of the ABI Code, we can only insist on ABI members participating. It is also aimed at improving the level of information for customers of member firms who have maturing pension plans. Given that Hodge Life are a specialist annuity provider offering rates on the open market, their rates are already available on, for example, the Money Advice Service site.

The structure and purpose of our tables, far from confusing consumers, were well understood by those who participated in our pre-launch testing. They got the message that this was about exploring options, and seeing how their pension provider compared with other rates on offer.

The competition point Alan makes in his second bullet is exactly the reason we are using 12 scenarios and historic data. I accept it means the rates are no longer available, but the price positioning of the various participating firms will still be relevant, and the regular updates will ensure it remains so.

We welcome all feedback on this initiative, critical and supportive, and will look to improve this first public version of our new resource. But I believe it is an important further step in creating an effective market for customers approaching retirement. And I also believe that the time has come for a more fundamental review of how wider solutions to the retirement challenge can be found in a world of low interest rates and increasing life expectancy. The industry would be enthusiastic participants in such a debate.

Otto Thoresen is director general of the Association of British Insurers.


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There are 5 comments at the moment, we would love to hear your opinion too.

  1. I do object to Otto Thoresen linking his desires for consumer outcomes to my desires. He must speak for himself and should be judged on the results of the ABI’s actions.

    No sane person can expect the ABI to lead consumers to better outcomes when the status quo benefits most of their members by £1billion each year. It will need regulatory intervention which may not be far away.

    After all, there wouldn’t be a thematic review on annuities by the FCA if there weren’t issues!

  2. Why is the ABI insisting it’s members produce data which is not clear, not fair and NOT misleading and NOT insisting that the same 27 firms supply TRUE, accurate and up to date data to the MAS?
    If I were the FCA I would be asking this question and telling them if they do not produce the true, accurate and up to date data, they will have to remove the website until then.

  3. I’m sick to death – not of new clients coming to see me, but that they all bring with them the standard 5 year guarantee annuity quotes produced by their provider, accompanied by 60 or 70 pages of paperwork (which the regulator insists uopon).

    In all cases I request and receive 10 year quotes from their company (and others) and then we start to explore and plot the best route forward for them.

    Until the providers are forced to provide the best quotes they can, namely 10 year minimum guarantee; spouse’s pension etc etc the general public is going to continue to be ripped off.

    I am also sick to death of requesting enhanced annuity rates after submitting a fully completed health questionnaire, only to be constantly bombarded by those who have quoted, seeing if they are near and if they can increase their initial quote in order to ‘get the business’. The first quote should be the best, and final quote in every instance.

    The annuity market is corrupt, feeding off the apathy, lack of knowledge and more than anything – the trust of their long time clients.

    Rant over…..and apologies to all

  4. Paul – Two good points well made, 10 year guarantee is appropriate in most (but not al) cases and details of the spouse might be a good starting point – however, single life might be better advice in some cases also. Many of the ‘enhanced’ rates are very poor – and the Dutch auction that goes on afterwards is unseemly, time wasting and unprofessional imho.

  5. Anonymous – the rates provided to the MAS ARE accurate and up to date.

    And the ABI cannot force members to publish their rates on MAS, as 1 – not all of the members offer OMO annuities currently, and 2 – you cannot force them to offer OMO rates (not all companies will have the capital available to back OMO levels of business, for example).

    The criticism you might level at the ABI Annuity Window is that it is not at all clear to a consumer which of the companies do and do not offer OMO. As a consumer using that website I would be very annoyed if I was told by, say, 3 of the top 5 quoting providers that they were closed to OMO business.

    Hiding the information behind the providers names is an awful solution. There could be a much simpler, more helpful approach – either an OMO provider table and a Non-OMO provider table, or a “OMO?” column with Y/N alongside, for example.

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