The Association of British Insurers says pension providers need to speed up transfer times for customers taking out annuities to avoid being hit by extra regulation.
At a recent Prudential annuity round table, the ABI warned that if providers do not improve their service levels for annuity customers the FSA will impose regulation on the industry to deal with it.
The ABI pension maturities statement of good practice says after payment of tax free cash where appropriate, pension funds should be sent to external annuity providers within 14 days of selected retirement date.
But many providers are falling well short of this target.
Origen head of retirement services Nick Flynn said: “Clients simply do not understand why it takes six weeks to get their pension. We write to clients and tell them it takes six to ten weeks and most of our complaints come because of that letter.”
ABI assistant director Helen White said: “Service standards are voluntary. We cannot force companies to adhere to these standards. If we don’t make significant changes voluntarily, the Government will in a few years impose changes.”
The panel also felt that the key to achieving better consumer awareness around annuities is promoting the open market option.
Prudential director retirement income Aston Goodey said: “With Omo, we need to move away from it being about getting the best rate to getting the right solution to meet the clients’ needs.”
Rockingham Retirement director Steve Hunt said: “People are living for 20 or 30 years after retirement and going into irreversible contracts they cannot change.”
William Burrows Associates director Billy Burrows said: “It is not about selling products and just providing information. People need advice. The challenge is how we involve people. If people get involved, they will understand.”