The Financial Conduct Authority has finalised its rules on wake up packs and annuity quotes after consulting the industry on the issue in September.
As part of a handbook notice published yesterday (October 31) the regulator gave feedback on various consultations that will not have a separate policy statement.
This included annuity quotes and wake up packs.
Wake up packs will be issued to savers on their fiftieth birthday and will have to include a generic warning on the risks around accessing a pension pot.
Providers will then be required to send wake-up packs at various age triggers. This means the information document will be sent to consumers ahead of their 60, 65, 70 birthday and so on.
But the FCA clarified that a pension provider is not required to give a consumer a wake-up pack when they have requested payment of their pension as a serious ill-health lump sum.
Giving a consumer a wake-up pack in these circumstances could be insensitive and the information is likely to be irrelevant to the client, according to the FCA.
Changes were made to annuity quotes so that providers do not have to produce a quote for consumers that refuse to answer questions about their health and lifestyle.
The regulator wants providers to offer these consumers a 'market-leading quote' so that it can be compared on a non-enhanced basis.
A standard annuity is a product that pays a regular retirement income – usually for life – using money from an individual’s pension pot but an enhanced annuity pays a higher level of income due to an individual’s health and lifestyle conditions.
The rules on wake up packs come into force from today (November 1) and providers need to adopt the amendments to annuity quotes by January 1, 2020, although the FCA has encouraged firms to comply already this month.
The FCA has not made any further amendments to the rules it had proposed, as out of the seven firms that responded, all agreed with the proposed changes.
But one respondent had an issue with the implementation date in regards to the annuity quote rules, calling it “unreasonable”.
However, as this respondent didn’t provide any “compelling evidence” as to why two months was an unreasonable timeframe in which to make the changes, the regulator dismissed its argument.
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