The ABI said that its research found unrequested illustrations of the annuity offering from a client’s pension provider have a “negligible” effect on people’s intention to shop around - and in some cases actually prompt people to look at the rest of the market.
However, the ABI code now requires illustrations to state that customers could get a better rate by shopping around and that a personalised illustration is provided before the sale of an annuity is completed.
The code of practice, first published in September, is a response to demands from the industry and government for greater encouragement of the open market option.
The revised code has been altered to acknowledge that a customer may begin planning for retirement earlier and that customers must be contacted between two and five years ahead of their selected retirement date.
Emphasis has also increased on making the customer aware of their options in each stage of the sales process. This includes asking them a set of questions which will prompt wider consideration of alternative options before making a final decision.
Otto Thoresen, director general of the ABI, said: “Improved processes, better signposting and transparency will combine to make customers more confident and more able to make decisions about their retirement income.
“This is not the end of our work helping customers to get the best deal at retirement; we will continue to work with key stakeholders including government and the advisory community to improve the customer experience.”
Tom McPhail, chairman of the Pensions Income Choice Association and head of pensions research at Hargreaves Lansdown, said: “Everybody needs to shop around so that they can make an informed decision about what type of retirement income will best suit their needs and to ensure that they are not missing out on a higher income.
“With the code of conduct, we are now making real progress in meeting the needs of the hundreds of thousands of pension investors every year who rely on the pensions industry to help them through the retirement process.”