Consumers in the Retirement Income Market

Transcription

1 Cnsumers in the Retirement Incme Market Cde f Cnduct n Retirement Chices March 2012

2 Cnsumers in the Retirement Incme Market 1 Executive Summary ABI figures shw that a third f peple d nt shp arund fr an annuity when they reach retirement and, as a result, may be missing ut n a higher incme, ptentially lsing thusands f punds ver the curse f their retirement. The ABI s Cde f Cnduct n Retirement Chices will ensure that custmers are equipped with the infrmatin they need t understand their ptins, shp arund and make an infrmed decisin abut their incme in retirement. The Cde f Cnduct will require ur members t: Prvide clear and cnsistent cmmunicatins t ensure custmers are able t make infrmed decisins abut retirement incme prducts, and are able t shp arund fr the mst apprpriate prduct. Highlight different types f retirement incme, particularly enhanced annuities and the much higher incme they can ptentially ffer, and infrm custmers whether they ffer these prducts. Clearly signpst custmers t surces f advice and supprt, bth frm regulated advisers and gvernment-backed advice rganisatins such as the Mney Advice Service and the Pensins Advisry Service. Establish transparency in the annuity market s that it is mre easily understandable and accessible t custmers, with a clear picture f hw individual prviders prduct fferings fit in with the wider market. We cnsulted widely n the Cde and this reprt includes summarised respnses frm stakehlders t the cnsultatin; and utlines ur psitin in light f feedback, with the final Cde attached.

3 Cnsumers in the Retirement Incme Market 2 The key areas f debate n the Cde, and ur view n these pints, are as fllws: The timetable fr implementatin will remain at ne year. The Cde is amended t reflect that the custmer jurney may start earlier, making clear that the Cde applies when queries are made abut early retirement; and that custmers must be cntacted between tw and five years ahead f their selected retirement date. The requirements n the sales prcess are strengthened t clarify that at each apprpriate stage in the sales prcess, the custmer must be asked a number f questins which will prmpt cnsideratin f their ptins; and they must explicitly and clearly be made aware f the risks arising frm their answers. Certain key messages in the template letter are prescribed and we have als taken n bard feedback n the cntent f the letter. We will take frward discussin with the Mney Advice Service abut their leaflet Yur Pensin It s Time t Chse and the ptins fr incrprating the Shpping Arund guide prduced in this Cde. The requirements fr members have been clarified alngside the cmpliance letter. We will require members t submit samples f preretirement cmmunicatin materials and will cmmissin an independent review t lk at these and assess the effectiveness f the Cde, at least in the first year. Cnsumer research published alngside this reprt indicates that unrequested illustratins have a negligible effect n peple s intentin t shp arund, and in sme cases prmpt peple t shp arund. We therefre d nt think it is apprpriate t ban illustratins. Hwever, the Cde nw requires that illustratins shuld state that custmers may btain a better rate by shpping arund; and that a persnalised illustratin is prvided befre a sale f an annuity is cmpleted. We remain f the view that the Cde shuld be relevant t almst all custmers and t ensure this is the case, we have made clearer the need fr custmer cmmunicatins t be in plain English.

4 Cnsumers in the Retirement Incme Market 3 We have als added infrmatin abut amalgamating small pts and tracing custmers; and prviders will be able t tailr their cmmunicatins t the small prprtin f peple fr whm an annuity may nt be apprpriate. We believe in the value f advice and guidance and we have increased the prminence f signpsting in the Cde: t the Pensins Advisry Service and Mney Advice Service; and t a directry f specialist financial advisers, when such a directry is available and suitable, in additin t existing ways t find an adviser. We recgnise the need fr greater transparency in the market and will establish transparency in the annuity market s that it is mre easily understandable and accessible t custmers. In additin, we will als cllect mre detailed data n annuity sales and will lk further at what mre we can publish. This significant step presents numerus challenges and will require additinal cnsideratin befre it is implemented. Several public plicy and regulatry changes ahead, as well as the cntinued evlutin f the market that accmpanies these changes, will have an impact n this Cde and the issues it seeks t address. We will cntinue t wrk with the Open Market Optin Review Wrking Grup led by DWP t ensure that the Cde is relevant t the wider cntext; and we will cntinue t engage with the debate n these issues wherever the industry has a part t play.

5 Cnsumers in the Retirement Incme Market 4 1. Backgrund and cntext 1.1 The market fr retirement incme is ging thrugh a perid f extensive change, adapting t factrs that have develped ver many years, sme f which are still t have an impact. The Gvernment s pensin refrms are changing the landscape, with millins mre peple autmatically enrlled int wrkplace pensins, largely n a defined cntributin basis. This means that demand fr retirement incme prducts will increase dramatically. At the same time, demgraphic, ecnmic and regulatry changes are having a substantial effect n the annuity rates available. Finally, prviders prduct fferings have evlved ver recent years. Fr example, enhanced annuities taking int accunt medical cnditins and lifestyle factrs are much mre develped than they were five years ag. 1.2 Fr the market t wrk mst effectively thrugh these changes, it is crucial that custmers are able t understand their ptins, identify the mst apprpriate prduct fr their circumstances and shp arund fr the best deal t make the mst f their retirement savings. The ABI and ur members recgnise the respnsibility industry has t supprt its custmers t make these chices at retirement. This is signalled in this Cde and in previus effrts by the industry in recent years t imprve the experience f buying a retirement incme prduct. Fr example: ABI members have develped and signed up t Orig s Optins pensin transfer service, which has drastically reduced the time it takes fr a pensin pt t be transferred frm ne prvider t anther, frm ver 30 days t an average time using Optins f under 10 calendar days. Our Gd Practice Guide Imprving custmers retirement experiences has been updated several times, ensuring ABI members have had an up t date set f principles setting ut the standards we expect frm ur members.

6 Cnsumers in the Retirement Incme Market Hwever, evidence abut the extent t which peple shp arund fr incme at retirement is mixed. In previus research, almst all peple at retirement reprted being aware f their right t shp arund fr a retirement incme prduct, with 67% ding s and 72% seeking infrmatin and advice 1. The number f peple buying frm a prvider ther than the ne they saved with is rising, frm 35% in 2009 t 44% in But research published alngside this reprt 3 shws the very lw level f knwledge and engagement f peple cming up t retirement, with a general assumptin that mney will smehw simply be paid back t me by my prvider. While lder peple as a brad categry are generally regarded as mre financially capable, peple cming up t retirement have a distinct and smetimes cmplicated set f needs, and ften feel daunted by the chices they face. It is clear that a significant number f peple arund a third 4 d nt shp arund, which may mean they d nt get the best value frm turning their savings int retirement incme, ptentially lsing ut n thusands f punds ver the curse f their retirement. 1.5 If the industry wants t truly discharge its respnsibility t its custmers, it needs t d mre. We published ur cnsultatin n Cnsumers in the Retirement Incme Market in December 2011, with a view t intrducing a cmpulsry Cde f Cnduct n Retirement Chices, as annunced in September The purpse is t ensure that all ABI members encurage custmers t shp arund fr a retirement incme, leading t mre custmers buying the mst apprpriate and cmpetitive retirement incme prduct fr their circumstances. 1.6 The Cde will ensure cmmn standards amng ur membership in their cmmunicatins and sales prcess fr custmers near t retirement. It will mean that the benefits f shpping arund and ways t seek advice will be highlighted t all custmers, in rder t equip them with the infrmatin they need t find the best type f prduct and rate fr them. 1 Annuity Purchasing Behaviur, ABI Research Paper n.23, ABI quarterly lng-term business statistics, Q These figures include sme single tied arrangements, which accunt fr an estimated 2% f premium incme frm external annuities and shuld make a minimal difference t these figures. As discussed in sectin 12, we are lking at hw t clearly separate tied sales in ur statistics. 3 Shpping arund fr retirement incme: unrequested annuity illustratins, ABI Research Paper n.31, Pensin Annuities and the Open Market Optin, ABI Research Paper n.8, 2008

7 Cnsumers in the Retirement Incme Market 6 2. Overall cmments 2.1 We chse t cnsult beynd ur membership t garner the wide range f views and interests in this imprtant issue, which has such a significant impact n the lives f peple in retirement. We received 36 respnses frm ur members, cnsumer rganisatins, prfessinal and ther representative bdies, financial advisers and advisry services. 2.2 All respndents welcmed the cnsultatin and the intentin f the Cde. There was brad agreement n mst f the Cde but starkly cntrasting views n a number f details. A number f respndents either suggested that the Cde shuld g further r that ther measures wuld be needed t slve the prblem including greater cnsumer educatin, further regulatin r alignment f regulatry regimes and Gvernment interventin. 2.3 We entirely agree that this measure alne will nt eliminate custmer inertia; and that access t advice and guidance remains key t ensuring gd utcmes fr custmers. Therefre we will cntinue t wrk with the range f stakehlders with an interest in retirement incme, predminantly thrugh the DWP s Open Market Optin (OMO) wrking grup. 2.4 A number f respndents referred t principles used in behaviural ecnmics, especially defaults, either as limitatins f the prpsed apprach r harnessing these t benefit cnsumers. A default OMO is ften presented as a slutin; this cncept culd perhaps be described as default shpping arund, r a frced decisin. 2.5 We believe in the value f advice but we want t ensure that when peple chse nt t take advice r it is nt available, the prcess will guide them in making better chices. This Cde cmes much clser t that psitin, withut requiring advice, by strngly encuraging custmers t shp arund and take independent advice and prescribing questins t lead t the best rate fr them.

8 Cnsumers in the Retirement Incme Market Respnses t individual questins in the cnsultatin are summarised belw. 3. Is the timetable fr implementatin apprpriate (questin 1)? 3.1 Almst all respndents agreed the timetable fr implementatin was apprpriate, althugh sme cnsumer grups and prviders felt it was the maximum apprpriate; and sme prviders felt it was challenging t meet this deadline while simultaneusly making changes fr Slvency II and the Retail Distributin Review. We will keep the timetable f ne year frm the publicatin f the Cde (1 March 2013), encuraging members t implement it as sn as they are able t within a year frm publicatin, wrking with members t vercme any cncerns abut the timetable. 3.2 T clarify, we wuld expect all packs and cmmunicatins after this date t be in line with the Cde. This wuld mean, fr example, if a prvider sends a wake-up pack befre ur deadline that is nt in line with the Cde, we wuld expect the fllw-up pack t be in line with the Cde if it was sent ut after the implementatin date. 4. Is the custmer jurney set ut in the Cde apprpriate (questin 2)? 4.1 The custmer jurney was generally received very psitively. Hwever, there were a number f key pints raised: There was a difference f pinin abut when the custmer jurney shuld start. Sme felt that five years ahead f the selected retirement date was t late; thers felt it was t early. We are aware that custmers are usually nt ready t think abut retirement until arund a year r less befre, but that cnsideratin shuld ideally start much sner especially given that benefits can be taken frm age 55.

9 Cnsumers in the Retirement Incme Market 8 It was nted that custmers d nt have the same jurney peple retire in different ways and may retire gradually; an annuity will nt be their nly incme and shuld reflect a wider range f at-retirement prducts. It was als stated that prviders shuld be satisfied that each step is cmplete befre mving n t the next. 4.2 We appreciate these pints but believe the jurney as described shuld apply very bradly. We agree that the sner custmers engage in retirement decisins, the better, but we believe this is beynd the reach f the Cde. Hwever, we have amended the Cde t make clear that it applies when queries are made abut early retirement; and that custmers must be cntacted between tw and five years ahead f their selected retirement date. 5. Are the requirements fr the sales prcess apprpriate (questin 3)? 5.1 Respndents were bradly supprtive f the requirements fr the sales prcess and highlighted its imprtance. Sme respndents called fr data cllected thrugh the sales prcess as defined by the questins listed in the Cde t be retained; that the Cde shuld state that the data shuld be acted upn; and an additinal questin t ask whether the custmer is aware f the OMO and has shpped arund. 5.2 The questins listed in the Cde t be asked in the sales prcess are: Whether they are taking any small pts as cash and/r taking tax free cash Whether they are married/partnered r have a dependent wh might utlive them Whether they are cncerned abut their incme lsing value because f inflatin

10 Cnsumers in the Retirement Incme Market 9 Whether they have any lifestyle r medical cnditins that may mean they are eligible fr an enhanced annuity Whether they have any ther pts and wuld benefit frm cmbining them 5.3 The questins are designed t prmpt custmers t cnsider their needs, and t make clear that there are several ptins available and what the implicatins f thse ptins are. If the questins are asked n the phne, calls wuld be recrded fr regulatry purpses. But the answers may nt be straightfrward and we want t avid these questins leading t a yes/n tick-bx apprach; therefre we will nt require prviders t share this infrmatin with us r t use this infrmatin t validate each custmer s chices in subsequent cmmunicatins with them. 5.4 The Cde is already clear that the custmer must be made aware f any risk arising frm answers t their questins, but we have strengthened the text t clarify that this must happen at each apprpriate stage in the sales prcess, and that the custmer must explicitly and clearly be made aware f the risks. 5.5 We have als added an additinal requirement, but nt a questin, t highlight the benefits f shpping arund. 5.6 Extra detail has been added n what is meant by payments being made prmptly and the measurement pint f a prduct being set up within 30 days. 6. Are there any changes yu wuld recmmend t the template cver letter (questin 4)? 6.1 There was a clear respnse that the template needs t be immediately engaging in cntent and frmat, and shrter with simple language. Hwever, varius suggestins were made fr items t include r nt include. We have made changes t reflect these cmments, changing phrases such as cmmutatin t be mre custmer-friendly.

11 Cnsumers in the Retirement Incme Market 10 The letter was widely thught clear, helpful and effective in cmmunicating a lt f new infrmatin by participants in the research cnducted alngside the Cde. 6.2 There was als a difference f pinin abut the degree f prescriptin. We d nt wish t dictate the exact cntents f the letter and have instead prescribed key pints that must be made. This is in line with the widely accepted view that t much prescribed text can fail t engage custmers 5. This will als allw prviders t highlight guarantees, access t advice r a shpping arund service that is available thrugh the scheme. 7. Are there any changes yu wuld recmmend t the template shpping arund guide (questin 5)? 7.1 A number f respndents agreed with the suggestin t incrprate this text int the Mney Advice Service guide, Yur pensin it s time t chse, including MAS themselves. Incrprating the shpping arund guide int the MAS guide wuld mean that the cntent will be cnsistent acrss prviders and, as such, answers the calls fr the text t be mandatry; and cncerns that it wuld duplicate ther material and cnfuse cnsumers. 7.2 On the ther hand, ur research published alngside this reprt, fund that a shrt guide cvering ways t shp arund was ppular with custmers and had a psitive impact n shpping arund: the language and tne were widely thught apprachable, custmer-friendly and easy t understand. 7.3 We will discuss this further with the MAS and ther stakehlders. The final utcme whether the shpping arund guide is kept separate r incrprated int the MAS guide may depend n further custmer research. 5 See, fr example, Warning: T Much Infrmatin Can Harm, Better Regulatin Executive, 2007

12 Cnsumers in the Retirement Incme Market As with the template letter, sme respndents felt that the shpping arund guide was t lng but thers made suggestins fr text t include: why t shp arund hw t shp arund such as gathering infrmatin and cmparing qutes chsing the right type f annuity a different apprach fr thse with small pts pts with ther prviders, and amalgamating pts emphasis n prviding fr dependants mre n drawdwn that mving pensins has been simplified examples f real-life cases graphical representatins f different types f annuity references t financial advisers, particularly specialists 7.5 We will discuss these pints and specific suggestins n cntent with the Mney Advice Service many f these are already cvered in their existing guide. 8. Are there any changes yu wuld recmmend t the template cmpliance letter (questin 6)? 8.1 Respndents were bradly in agreement with the nature and cntent f the cmpliance letter. There was sme cncern that we need t be specific abut what is being measured.

13 Cnsumers in the Retirement Incme Market T clarify tw pints raised: Where a Member Cmpany is a multi-natinal rganisatin, it will be permissible fr the Cmpliance Letter t be signed by the Chief Executive f the UK Business. We expect all prviders t cmplete and sign the CEO letters, but they need nly demnstrate cmpliant prcesses and cmmunicatins where it is applicable t them. Fr example, if a prvider des nt sell annuities they need nt mnitr the number f days t cmplete a sale. 8.3 There were calls fr the cmpliance requirements t g further; these are listed belw, alng with ur respnse n each pint. Fr members t submit cpies f pre-retirement cmmunicatin materials, r samples. In the first year f implementatin, members will be required t send a sample f their cmmunicatins t the ABI, wh will cmmissin an independent review t assess effectiveness f the Cde. ABI will nt mnitr the cntent f the pack. Fr members t publish their annual cnfirmatin letters in their Annual Reprts this is a matter fr members but it will nt frm part f the Cde. Fr members t cnduct research with custmers t validate that they understand the key messages, and the actin they shuld undertake. We wuld welcme members researching these matters but we will nt prescribe hw members cnduct their custmer research. If any shrtcmings have been identified that these shuld be listed and the remedial actin explained. We wuld be keen t discuss the impact f the Cde n ur members as they implement it, but will nt require them t detail this in their letters.

14 Cnsumers in the Retirement Incme Market D yu have any evidence abut the impact that illustratins have n custmer engagement r behaviur (questin 7)? 9.1 Respndents referred t the fllwing research: DWP research which fund that sme participants, particularly thse wh were mre financially aware, fund illustratins allwed them t better predict the incme they wuld need in retirement. Other participants fund illustratins t cmplicated t understand r nt apprpriate t their wn circumstances 6. Pica research n the impact f unslicited illustratins, suggesting that these anchr the custmer t the prvider 7. Custmer research which fund that an estimate f retirement incme was cnsidered the mst beneficial feature f the annuity prcess. A prvider fund nly a 1% difference in thse wh elect t take an Open Market Optin between a grup f custmers wh receive an illustratin and a grup f custmers wh d nt. Anther prvider fund that very few custmers, despite infrming them f their ptins, requested a re-qute under different terms than thse quted in the initial retirement pack; mst custmers accepted the riginal qute. 9.2 In the cnsultatin paper we nted that there was a difference f pinin n whether the Cde shuld allw illustratins t be included, which was reinfrced by the respnses t the cnsultatin. A number f respndents stated that unrequested illustratins shuld nt be included in packs, citing behaviural factrs f lss aversin, anchring and familiarity bias. Many suggested using generic rate tables instead. While we d intend t address the behaviural factrs mentined, we d nt accept the arguments n remving illustratins fr the reasns explained belw. 6 Infrmatin needs at retirement: Qualitative research n annuitisatin decisins, DWP, The macrecnmic impact f shpping arund fr retirement incme, Oxfrd Ecnmics fr the Pensin Incme Chice Assciatin, 2009

15 Cnsumers in the Retirement Incme Market ABI research cnducted alngside this cnsultatin fund that recipients f illustratins were n less likely t shp arund; and sme said it wuld prmpt them t shp arund. This was partly because the rate was lwer than custmers expected, which culd be described as a respnse t lss aversin. Similarly, a figure in the illustratin may serve as a benchmark fr cmparisn rather than anchring the recipient t that prvider. 9.4 It is just as likely, we believe, that any generic table r ther endgenus factrs like advertisements r best buy tables wuld have such an anchring effect as that described abve. T cmbat any such effect we have added wrding in the final Cde t encurage recipients f illustratins t shp arund, which aims t help custmers vercme the tendency t settle fr the first qute that seems reasnable r exceeds a mental benchmark r anchr. We agree, thugh, that generic rates may be an imprtant tl fr custmers in understanding the need t shp arund and we are interested in cnsidering further hw generic rates culd be used, fr example thrugh the Mney Advice Service. 9.5 Furthermre, we will require firms t prvide custmers with a persnalised illustratin at sme pint in the prcess befre a sale is cmpleted. This reflects current industry practice. 9.6 Familiarity bias, r brand lyalty, will remain a strng factr regardless f the inclusin f an illustratin the evidence fr this is striking. While we acknwledge that this will smetimes lead custmers t a lwer rate, the custmer may have many reasns fr their decisin and there is nthing inapprpriate abut brand lyalty in these cases. Nnetheless, we fully agree with the need t signpst t advice t enable custmers t make as infrmed a decisin as pssible.

16 Cnsumers in the Retirement Incme Market Are the requirements fr each stage in the Cde apprpriate (questin 8)? 10.1 Effectiveness f cmmunicatins Respndents generally agreed that requirements fr each stage in the Cde were apprpriate. Sme prviders did nt want t cmprmise their wn cmmunicatins where these were demnstrated t serve custmers needs well. We d nt wish t prevent members frm supprting custmers well; but the purpse f the Cde is t set cmmn standards, which is why we have prescribed key pints and pieces f infrmatin but nt lng passages f text It was als stressed that cmmunicatins must be clear abut the risks f an annuity, what happens if yu die and particularly its irrevcable nature. Again, the need t refer t independent and specialist advice was clear, including services in the wrkplace. We have taken these pints n bard and amended the Cde accrdingly Effectiveness f the Cde A variety f respndents stressed that the whle package needs t wrk tgether; and this shuld be externally mnitred. ABI will take n this rle in rder t understand hw t imprve custmer utcmes, and this paper discusses success measures. We als value the input f the OMO Review Wrking Grup, led by DWP, which is itself lking at success measures Infrmatin verlad Many respndents pinted ut, and we are acutely aware f, the danger f infrmatin verlad: that the entire pack is t much t take in r t much t engage with at all. Hwever, the research published alngside this Cde fund that the pack was widely liked mst felt the items cmbined well t give a gd intrductin t the issue, were written in plain English and were nt t lng. Many respndents als felt the pack wuld allw them t start thinking abut the decisins they will need t make, r even t act n these.

17 Cnsumers in the Retirement Incme Market 16 The independent review mentined n pg.8 will help ensure the Cde is effective, including the prescribed infrmatin; and we wuld appreciate feedback frm ur members and thers nce the Cde is implemented Relevance t particular grups It was questined whether the Cde can deal with the needs f particular grups: thse with small pts, thse wh d nt engage at all r thse fr whm an annuity might nt be mst apprpriate. We believe that it is apprpriate t use the Cde acrss these grups fr example, we d nt believe that the shps are shut fr peple with small pts, as many prviders will ffer annuities fr funds lwer than 5,000 and advice is available mre widely than has been asserted. Nnetheless, t address the cncern, we have added infrmatin abut amalgamating small pts and will mnitr the impact n thse with small pts; added a requirement t make effrts t trace peple fr whm there is nt a current address; and as mentined previusly, subject t prescribed key messages, prviders will be able t tailr their cmmunicatins t the small prprtin f peple fr whm an annuity may nt be apprpriate. This includes references t ther ways t take a retirement incme. 11. Are there any ther useful custmer resurces we shuld be signpsting custmers t and which are nt mentined in the Cde (questin 9)? 11.1 The fllwing resurces were mentined: Directgv, which includes pensin tracing, tax n pensins and pensin frecasts Other advice services including Which? Mneysavingexpert.cm Lvemney.cm

18 Cnsumers in the Retirement Incme Market 17 The Pensins Advisry Service and its annuity planner shuld be mre prminent Nn-internet surces shuld be available wherever pssible Once mre, a list f specialist advisers was requested. The DWP OMO wrking grup has discussed creating such a directry. When a suitable directry is available we will include a link t it It was als suggested t mentin, but nt necessarily list, cmparisn tables ther than the Mney Advice Service We believe that any surces shuld be clearly independent and have amended the Cde accrdingly. 12. D yu have any ther cmments n the Cde f Cnduct (questin 10)? 12.1 Applicatin frms Tw respndents questined remving applicatin frms frm prvider cmmunicatins and fr understandable reasns: a prvider sends frms t thse with a guaranteed rate, alngside an OMO frm and a cmmutatin frm; and an adviser was cncerned that it wuld lead t custmers calling their prvider and being engaged in a sales prcess. We understand these cncerns and have clarified that this nly refers t annuity applicatin frms. We wuld welcme evidence n the specific impact f applicatin frms being remved. But given the significance f remving applicatin frms in prmpting custmers t cnsider their ptins, we d nt prpse t change the requirement t remve annuity applicatin frms.

19 Cnsumers in the Retirement Incme Market Scpe Questins were asked abut the scpe f the Cde. The Cde applies wherever the custmer can purchase a lifetime annuity, including a custmer receiving drawdwn appraching a future assumed annuity purchase date. In cases where packs are nt currently distributed, this Cde des nt create a need t distribute them, but we wuld expect prviders t apply the principles f the Cde. If the custmer elects t defer retirement, the Cde shuld be applied again as the custmer reaches their new Selected Retirement Date. In ther situatins where smene purchases an annuity, such as where a dependant receives a benefit n the death f the plicyhlder, it wuld depend n the scheme rules but we wuld expect prviders t apply the principles f the Cde Definitins f prducts Tw pints were raised abut the absence f cmmn definitins: The number f different types f retirement prducts wuld benefit frm generic wrding t be used within all cmmunicatins and updated when necessary. There is n enfrceable definitin f enhanced, s a prvider culd ffer nly slightly imprved rates fr thse with reduced life expectancy and use the term enhanced annuity These questins are nt answered by the Cde but we understand the need t address the issue. As the market evlves, further develpments are likely, s we d nt believe it wuld be helpful fr the Cde t set definitins at this stage Transparency Sme respndents called fr mandatry publicatin f mre data, including retentin rates and spread f market rates.

20 Cnsumers in the Retirement Incme Market 19 We recgnise the need fr greater transparency in the market and we and ur members cmmit t establishing much greater transparency in the annuity market, s that rates are mre easily understandable and accessible t custmers, with a clear picture f hw individual prviders prduct fferings fit in with the wider market This significant step presents numerus challenges and will require additinal cnsideratin. Fr example, sme custmers are able t access guaranteed rates that wuld nt be available n the pen market; and rates are likely t becme increasingly tailred t the persn, s will be difficult t determine in a single number We will als lk at what mre we can publish, fr example, retentin rates and sales f enhanced, jint and escalating annuities. Publishing this level f data creates additinal cmplicatins: fr example, high retentin rates culd be explained by a number f factrs, including a strng brand r cmpetitive rates, as well as custmer inertia Our cmmitment t transparency will need t take all f these factrs int accunt and we will wrk with members t ensure it is achieved in a way that is genuinely helpful t custmers, fair and accurate, while prtecting cmmercially sensitive infrmatin. We will wrk up the detail f this cmmitment ver the cming mnths t ensure that greater transparency is in place and reflected in the Cde when it is implemented n 1 March Reviewing the cde and success measures Respndents stated that we shuld make arrangements nw fr future reviews f the Cde, including review fr the impact f RDR and the pssibility f electrnic versins f wake-up packs. The Cde will be reviewed after a year f implementatin, in spring 2014, with input frm the OMO Review Wrking Grup r, if that grup is n lnger active, a similar gruping.

21 Cnsumers in the Retirement Incme Market Several respndents sught detail n success measures fr the Cde: whether the bjective is t encurage the number f peple wh shp arund t reach 100%, r t help thse wh d shp arund t cnclude this sales prcess and buy a retirement incme prduct with an alternative prvider, r buy ptins such as death benefits escalatin and enhanced annuities Suggestins were als made fr research: Custmers wh have retired but nt utilised the pen market ptin shuld be asked what culd have been dne differently, and t explain their decisin. Cmpare inertia and switching behaviur in ther markets, such as energy and mtr insurance and t review existing research in this area. Understand the full custmer jurney by bserving behaviurs thrughut the shpping arund prcess the barriers they face, the length f time it takes, hw they apprach the prblem and what rle financial advice plays We will take these suggestins n bard as we devise ways t assess the impact f the Cde and additinal changes that may be required Taking actin is as imprtant as understanding, and far mre imprtant than custmers' stated intentins. The ultimate aim is t imprve the number f peple shpping arund and getting the best shape f prduct and rate fr them. We are wrking with members t imprve the data we cllect fr example, n internal and external sales f enhanced, jint and escalating annuities. We are explring with members hw ur statistics can separate externally purchased annuities int Open Market Optin annuities and thse assciated with a tied arrangement between prviders; and annuities bught frm grup r individual pensins We will als need t mnitr the impact f illustratins and wuld welcme data frm members n actual behaviur with and withut illustratins, t further test ur psitin that many custmers welcme an illustratin but that it makes little difference t the buying decisin.

22 Cnsumers in the Retirement Incme Market In additin, we will cntinue t wrk with the OMO Review Wrking Grup, which is investigating measures f success. We believe quantitative and qualitative research will be needed t assess the extent f understanding and shpping arund. Research findings frm members and ther stakehlders will still be welcme Advice and status disclsure A number f respndents raised questins abut hw the Cde relates t the interactin f prviders and advisers. We have clarified in a number f places hw the custmer can seek advice, including frm their wn r a wrkplace adviser, and when the prvider needs t tell the custmer abut this Suggestins were als made abut status disclsure: that anyne selling an annuity shuld be required t state frm what pl f prviders they are selling. Since any requirement in the Cde wuld nly apply t ur members, its impact wuld be limited The Cde will nt determine the relatinship between prviders and advisers, as its fcus is n the relatinship between prviders and custmers. The regulatry framewrk fr advice is changing and nce the new picture emerges, we will need t cnsider its impact n the market and the Cde. Fr example, we want t avid custmers being referred t surces f advice that are nt able t help. 13. Wider issues and future challenges 13.1 Thrughut this prcess we have acknwledged that this Cde must be interlinked with the rest f the savings and retirement landscape; and with ther ways t prmte cnsumer engagement and shpping arund. T this end, we have ensured that the Cde des nt impinge n existing regulatin. We will discuss with stakehlders hw we can integrate the principles f this Cde int trust-based ccupatinal schemes, s that all pensin scheme members can expect cmmn standards and access infrmatin and advice abut retirement in a lgical and cherent way.

23 Cnsumers in the Retirement Incme Market Several factrs will affect the brader landscape, in the year in which this Cde is implemented and beynd. That these factrs are ccurring simultaneusly highlights the need fr the Cde t be respnsive. The implementatin f the ECJ gender ruling by 21 December 2012 will mean that annuity prviders will nt be able t differentiate prices n the basis f gender. This in itself presents a challenge t the market and is likely t lead t changes in the way annuities are priced and underwritten. As the market evlves further, there may be a need t define enhanced annuity, and ther terms. There is a general understanding f what this means, which is reflected in the Cde. But there are degrees t which an annuity is enhanced; and if mre annuities becme enhanced, its meaning may alter. An apprach t hw custmers manage with a large number f small pts fllwing aut-enrlment is an imprtant public plicy issue, currently under review by DWP, and a slutin may be agreed befre the Cde is implemented. The implementatin f the Retail Distributin Review frm 1 January 2013 will alter the market fr financial advice and the relatinship between custmers, advisers and prviders. We will need t mnitr access t advice in all its frms and channels We will cntinue t wrk with the range f stakehlders in the OMO review wrking grup t ensure the Cde is relevant t the wider cntext in which it sits. The market will cntinue t evlve t adapt t these changes. All elements f the system advice prviders, all types f pensin schemes, public plicy and regulatin will need t cmbine t make it wrk mst effectively. We will cntinue t engage with the debate n these wider issues wherever the industry has a part t play.

24 Fr mre infrmatin, cntact: Assciatin f British Insurers, 51 Gresham Street, Lndn EC2V 7HQ

25 The ABI Cde f Cnduct n Retirement Chices Cntents 1. Intrductin p.1 2. Applicatin f the Cde p.2 3. The custmer jurney: summary p.2 4. The custmer jurney p.3 a) Understanding retirement p.3 b) Understanding the different ways t take retirement incme p.4 c) Understanding hw t buy p.4 5. Unrequested illustratins p.6 6. The sales prcess p.7 7. Terminlgy p.8 8. Useful resurces p.8 Annex A: Template cver letter p.9 Annex B: Template shpping arund guide p.13 Annex C: Cmpliance p.17

26 1. Intrductin This Cde f Cnduct has been develped by the ABI and its members t ensure that pensin prviders cmmunicatins t custmers appraching retirement help every custmer t make an infrmed decisin by understanding: his r her retirement chices; the different prduct types available, and their apprpriateness fr the custmer s circumstances, including enhanced annuities; and the benefits f shpping arund fr the mst apprpriate and cmpetitive retirement incme prduct. 2. Applicatin f the Cde The Cde sets ut the rules that ABI members must fllw thrughut the retirement prcess, including where custmers enquire abut retiring early. It applies wherever an ABI member is cmmunicating directly with a new r existing custmer wh can buy a lifetime annuity. The Cde applies t ABI members in relatin t trust-based ccupatinal schemes in these circumstances; and therwise where the prvider is instructed by the trustees that it shuld apply. These requirements must be fllwed in additin t any legislative r regulatry requirements that may als be relevant, but d nt verride any existing cntractual requirements previusly agreed with the custmer, their trustees r anther prvider. This includes, fr example, any agreement that the trustees f a scheme are respnsible fr cmpiling the custmer cmmunicatins, r any autmatic cnversin f a pensin pt t an annuity at the age f The custmer jurney: summary The primary purpse f all custmer cmmunicatins is t help the custmer understand the decisins he r she must make, and t supprt him r her thrugh the retirement prcess. The prvider must ensure that their cmmunicatins take the custmer thrugh the fllwing jurney: a) Understanding retirement The custmer must be clearly infrmed abut the decisins he r she will need t make befre receiving a retirement incme. The timetable f these decisins must be set ut clearly, and the pssibility f deferring retirement, cmmuting r amalgamating pensin pts must be explained. b) Understanding the different ways t take retirement incme The prvider must explain the range f ways retirement incme can be taken, including thse prducts they d nt ffer themselves. The prvider must give the custmer clear infrmatin describing the characteristics f the different prducts and where further infrmatin and help can be fund. The prvider must highlight the pssibility f jint, escalating and enhanced annuities. 2

27 c) Understanding hw t buy The prvider must encurage the custmer t gather cmparative qutatins frm different prviders. In rder t d this, the prvider must clearly explain hw this can be dne, prvide all the infrmatin needed and must nt sell any prduct by relying n the custmer s inertia r ignrance. 4. The custmer jurney a) Understanding retirement Between tw and five years prir t their selected retirement date (SRD), a prvider must cmmunicate with a custmer n an individual basis at least nce t: Encurage the custmer t start cnsidering their retirement ptins Intrduce the custmer t the decisins they will need t make This can be dne thrugh the annual pensin statement, r alternatively thrugh a separate custmer cmmunicatin. If a prvider has nt already been apprached by a custmer abut their retirement ptins, the prvider must als: send ut a wake-up pack at least 6 mnths pre-srd fr trust-based ccupatinal schemes and at least 4 mnths pre-srd fr cntract-based schemes send ut a fllw-up pack at least 10 weeks pre-srd fr trust-based ccupatinal schemes and at least 6 weeks pre-srd fr cntract-based schemes the prvider must make an effrt t trace the custmer if the prvider des nt have a current address fr the custmer. Bth wake-up packs and fllw-up packs must als: Highlight the imprtance f the cmmunicatin and emphasise that the custmer shuld nt ignre it Be clear and jargn free (fr guidance, see Custmer Impact Clear Language and Layut Gd Practice Guide, ABI Jargn Buster and the Plain English Campaign Be targeted as much as pssible t the circumstances f the individual custmer Set ut infrmatin in as accessible and engaging a way as pssible, with signpsting t key infrmatin where relevant Avid incnsistencies and irrelevant infrmatin, r duplicatin within each pack Take accunt f custmer preferences f the apprpriate methd f cmmunicatin where pssible Highlight the benefits f shpping arund, and set ut ptins including deferring retirement, cmmuting r amalgamating pensin pts. 3

28 Fllw-up packs must: Give a strng message f the need t make a decisin Bth thrugh the wake-up and fllw-up packs, and when apprached by a custmer abut their retirement ptins, a prvider must: Encurage the custmer t cnsider their circumstances and their retirement incme ptins Encurage the custmer t seek financial advice and/r further infrmatin (by at least signpsting them t the useful custmer resurces) Explain the timescale f the retirement prcess Explain the decisins the custmer needs t make at each pint f the retirement prcess b) Understanding the different ways t take retirement incme Bth thrugh the wake-up and fllw-up packs, and when apprached by a custmer abut their retirement ptins, a prvider must: Explain the range f ways in which a custmer can receive their retirement incme, including the different annuity ptins and prducts available, particularly the pssibility f medical cnditins r lifestyle chices leading t a higher level f retirement incme, and including jint and escalating annuities and ways t keep savings invested (see Annex A fr brief descriptins f these prducts) Encurage the custmer t seek further advice and/r infrmatin abut the different ways in which they might be able t take their retirement incme (by at least signpsting them t the useful custmer resurces) Highlight any applicable guaranteed annuity rate (GAR) r ther guarantee r market value reductin (MVR) Bth wake-up packs and fllw-up packs must als: Prminently highlight the pssibility f medical cnditins r lifestyle chices leading t a higher level f retirement incme Prminently highlight any applicable guaranteed annuity rate (GAR) r ther guarantee Include the Mney Advice Service leaflet c) Understanding hw t buy Bth thrugh the wake-up and fllw-up packs, and when apprached by a custmer abut their retirement ptins, a prvider must: Indicate the value f the custmer s pensin pt Explain the benefits f shpping arund and that ther prviders might ffer a higher level f retirement incme Explain that the prvider might nt ffer the annuity ptins r prduct that best meets the custmer s needs 4

29 Explain t the custmer hw t shp arund and encurage the custmer t seek further advice and/r infrmatin abut this (by at least signpsting them t the useful custmer resurces) Bth wake-up and fllw up packs must als: Make available all infrmatin abut a custmer s pensin pt needed fr shpping arund in ne easily accessible place (see Annex A) Prminently highlight the benefits f shpping arund and state clearly that ther prviders might ffer a higher level f retirement incme Include a shpping arund guide (see Annex B) [NB this may be changed if the guide is incrprated int the MAS guide] Nt allw the custmer t purchase an annuity frm the prvider withut first cntacting that prvider Nt include an annuity applicatin frm unless specifically requested by the custmer. 5

30 5. Unrequested Illustratins An unrequested illustratin that is included in the wake-up r fllw-up pack, where a prvider demnstrates the level f incme the custmer s pensin pt culd buy, must: be fr the purpses f: encuraging the custmer t cnsider which annuity is mst apprpriate fr his r her circumstances, and demnstrating the impact the decisin will have n their retirement incme clearly state that all rates are indicative, where that is the case shw a rate that the custmer is able t access use standardised payment ptins, unless the custmer cannt access these be as cncise and clear as pssible clearly and prminently state that the custmer may be able t btain a higher rate by shpping arund Unless the custmer has requested an alternative, an illustratin must clearly set ut at least: any applicable GAR r ther guarantee a single-life annuity a jint-life annuity and either an escalating annuity, r a prminent statement as fllws: [This illustratin des nt include / we d nt ffer] an escalating annuity. An escalating annuity helps yu keep up with inflatin. With this type f annuity yur payments will start lwer than with ther annuities, but will increase ver time. Please cntact us if yu wuld like us t prvide an illustratin fr an escalating annuity. and either an enhanced ptin, r a prminent statement as fllws; [This illustratin des nt include / we d nt ffer] a rate based n yur health r factrs that affect hw lng yu might live, such as medicatin yu take, where yu live, yur ccupatin and whether yu smke. This is knwn as an enhanced annuity and if yu are eligible fr ne, [this type f annuity / anther prvider] culd ffer yu a much higher level f incme. 6

31 6. The sales prcess Prviders must nt send an annuity applicatin frm t custmers in either the wake-up packs r fllw-up packs. An annuity applicatin frm must nt be sent until cntact has been made between the custmer and a prvider. A persnalised illustratin must be prvided t the custmer befre the sale f an annuity is cmpleted. This may be by telephne r in writing, r any ther methd the prvider cnsiders apprpriate. When cllecting infrmatin frm the custmer in rder t send ut a persnalised illustratin, annuity qutatin r t sell any retirement incme prduct, the prvider must ensure the custmer is asked the fllwing questins and at each apprpriate pint is explicitly and clearly made aware f any risk resulting frm their answers. This can be dne by ensuring the custmer has filled ut a cmprehensive infrmatin cllectin frm whether nline r in hard cpy, by means f a telephne cnversatin, by ensuring the custmer has cnsulted a financial adviser, r by any ther methd the prvider cnsiders apprpriate. Whether they are taking any small pts as cash and/r taking tax free cash Whether they are married/partnered r have a dependent wh might utlive them Whether they are cncerned abut their incme lsing value because f inflatin Whether they have any lifestyle r medical cnditins that may mean they are eligible fr an enhanced annuity Whether they have any ther pts and wuld benefit frm cmbining them The prvider must als highlight t their custmer the benefits f shpping arund. When quting r selling an annuity, a prvider wh des nt ffer an enhanced annuity must make the fllwing statement: We d nt ffer a rate based n yur health r factrs that affect hw lng yu might live, such as medicatin yu take, where yu live, yur ccupatin and whether yu smke. This is knwn as an enhanced annuity and if yu are eligible fr this type f annuity, anther prvider culd ffer yu a much higher level f incme. Prviders must make all payments prmptly and accurately, t the same standards as wuld be achieved thrugh the Optins service. Prvider cmmunicatins fllwing purchase must: cnfirm the details f the purchase clarify the details f any cancellatin rights Where a prduct was bught thrugh the Open Market Optin, bth prviders must: use best endeavurs t ensure the prduct is set up within 30 days frm receipt f infrmatin by the receiving prvider t cmpletin f the cntract by the prvider use Optins where pssible Where a custmer s purchase is delayed, the prvider must take steps t reslve the delay as quickly as pssible and keep the custmer infrmed. 7

32 7. Terminlgy The ABI encurages its members t use plain English in cmmunicatins with custmers. This Cde des nt require ABI members t use particular terminlgy. Fr example, it uses phrases such as enhanced and escalating annuities but members can equally use impaired r increasing. Where the Cde refers t custmers, it means bth prspective and existing custmers. 8. Useful custmer resurces Fr general retirement advice and infrmatin The Mney Advice Service, , The Pensin Advisry Service, , The Pensin Service, fr pensin tracing, plus infrmatin abut pensins including State Pensin frecasts: Fr financial advice and t find an adviser IFA Prmtins, Persnal Finance Sciety, [A suitable directry f specialist retirement incme advisers will be added nce this is available] Yu may be able t access advice thrugh yur wrkplace and can use yur current financial adviser, if yu have ne Fr infrmatin abut different retirement incme prducts The Mney Advice Service leaflet Yur pensin it s time t chse The Pensins Regulatr leaflet Making yur retirement chices think befre yu chse The Pensin Advisry Service, including an nline annuity planner Fr help with shpping arund The Mney Advice Service nline retirement incme cmparisn tl, 8

33 Annex A Template cver letter fr wake-up and fllw up packs Objective The cver letter t bth the wake-up and fllw-up pack must: Give custmers all the infrmatin they need abut their pt t shp arund Emphasise the imprtance f shpping arund Highlight the mst imprtant questins the custmer must answer in rder t chse an apprpriate retirement incme prduct. Use f the template and key pints that must be made Prviders must use the template t ensure that: The cver letters are engaging, relevant and shrt (3 pages at mst) Their custmers are taken thrugh the custmer jurney set ut in this cde The value f the pensin pt, any guaranteed annuity rate r ther guarantee, and any market value reductin is included n the first page The three questins n the custmer s circumstances are included The headline message and summary f infrmatin appear n the first page f the letter The text in the headline message is used. Prviders d nt need t use template s exact wrding r rder, unless stated here. Sectins that are nt applicable t the custmer need nt be included. Any shpping arund service ffered by a prvider, r ther way t access advice, may be highlighted in the letter. Occupatinal schemes If the prvider is issuing the wake-up letter t the trustees, sufficient time must be allwed fr the trustees t frward the infrmatin t the member t meet the six mnth deadline. This material may include a letter t the member, depending n arrangements between the prvider and the trustees, as mentined in sectin 2. 9

34 [1 Headline message] This letter cntains imprtant infrmatin t help yu t turn yur pensin savings int a retirement incme. It s imprtant that yu read this letter and cnsider all yur ptins it will help yu get the best value frm yur savings. [2 Intrductin] Dear [X] Yu are appraching yur selected retirement date, and will sn need t make a decisin abut what t d with the mney yu have saved with us. Buying a retirement incme has been made easier recently and this letter and the accmpanying infrmatin will help yu t d this. Yu shuld als shp arund and cnsider taking advice t find the best pssible incme and the enclsed Shpping Arund guide [NB this may change if incrprated int MAS guide] explains hw t d this. If there is anything yu dn t understand r yu wuld like t talk thrugh yur ptins, please cntact us n [XXXXXXXXX]. Alternatively, yu can ring The Pensins Advisry Service fr free impartial infrmatin and guidance n all pensin matters n [3] Summary f infrmatin [Firm t insert infrmatin] Name f plicyhlder: Plicy number: Current value f pensin pt: Infrmatin n any GAR (r ther guarantee) r MVR: [4] Retirement Optins There are many different ways yu can take yur retirement incme. Belw are a few f the mst ppular ptins and there is mre infrmatin abut each f them in the accmpanying brchure. Once yu have decided what yu want t d, please get in tuch with us and let us knw. a) Pstpne taking yur retirement incme Yu d nt need t d anything with yur pensin pt yet. Yu can leave it with us and we will cntact yu again in X years. Please let us knw if yu want t d this n the frm included. b) Taking smaller pensin pts as a lump sum [If apprpriate and relevant t scheme] 10

35 If the ttal value f all yur pensin savings is less than [ X,000 (current tax year)], yu may be able t take it all as a cash lump sum. If yu wish t d this, yu have t take all payments frm all yur pts within a 12-mnth perid. If up t tw f yur pts is each less than [ X,000 (current tax year)], yu may als be able t cash each f them in, regardless f any ther pensin savings yu have. If yu think yu might like t d this, please ask us fr further details. c) Tax free cash Yu can usually take up t a quarter f yur pensin pt tax-free as a cash lump sum, using the remainder t buy a retirement incme prduct. d) Buy a retirement incme prduct i) Annuities An annuity is a financial prduct where yu use all r sme f yur pensin savings t buy a guaranteed incme fr the rest f yur life. It is the mst ppular way peple buy a retirement incme and, if yu have built up mre than ne pensin pt, yu can cmbine them int ne annuity. Buying an annuity is a ne-ff decisin that will set yur incme thrughut yur retirement and cannt be changed. Yu d nt have t buy an annuity frm us, and yu shuld shp arund t make sure yu buy the right type f annuity fr yu. The Shpping Arund guide enclsed [NB this may change if incrprated int MAS guide] cntains mre infrmatin n hw t cllect different qutatins frm different annuity prviders. There are many different types f annuity, each designed t suit different persnal circumstances. If yu plan t buy an annuity, yu shuld cnsider the fllwing questins: Are yu married r d yu have a partner r anther dependant? Will they need an incme if yu die first? If s, yu shuld cnsider a jint-life annuity, which cntinues t pay an incme fr bth f yur lives. D yu smke? Are yu n any medicatin r d yu have a medical cnditin? If s, yu may be eligible fr an enhanced annuity, which culd pay yu a much higher level f incme. D yu want yur incme t increase ver time t help keep up with inflatin? If s, yu shuld think abut an escalating annuity, which starts lwer but increases ver time, r adjusts t rise in line with inflatin. There is a free nline annuity planner at which can help yu answer these and ther questins abut which type f annuity is right fr yu. 11

36 ii) Prducts that keep yur mney invested Sme retirement incme prducts allw yu t keep yur mney invested, which gives the ptential fr yur incme t grw, but the incme is nt guaranteed and there is a risk that yur incme will g dwn. Flexible investment-linked annuities prvide an incme fr life but allw yu t keep yur mney invested. Fixed term annuities use part f yur pensin t prvide incme fr a fixed perid. Drawdwn allws yu t draw an incme frm yur pensin while keeping it invested. The accmpanying brchure includes infrmatin abut these ther ways yu culd take yur retirement incme. Yu shuld speak t a financial adviser if yu are thinking abut ne f these prducts. [5] The Lifetime Allwance [if apprpriate] If the ttal value f all yur pensin funds is mre than [ X,000,000 (current tax year)], and yu have nt taken steps t prtect yur funds, we have t apply a Lifetime Allwance charge set by the Gvernment. We strngly recmmend that yu take financial advice if yur ttal pensin savings exceed r are clse t this amunt. [6] What happens next? [in line with the prvider s prcess] Please cntact us t discuss what yu wuld like t d with yur pensin pt, either by telephne n [XXXXXXXXX], r by filling in the frm enclsed. If yu d nt get in tuch with us, we will write t yu again in [x-x] weeks. 12

37 Annex B Template shpping arund guide [NB will be remved if it is incrprated int the MAS guide, but the messages will remain] Objective The shpping arund guide has been designed t encurage custmers t shp arund and supprt them thrugh the prcess by: Shwing them different methds f shpping arund Alerting them t the questins they will be asked Helping them gather the infrmatin necessary t answer thse questins, and Shwing them where t g fr help with shpping arund. Use f the template Prviders must use the template t ensure that their shpping-arund guide: Is a separate leaflet f n mre than three pages that is clearly distinguishable frm ther material in the same cmmunicatin pack Actively encurages custmers t lk beynd the prvider s wn prducts Accurately signpsts the custmer t where further infrmatin can be fund either in the prvider s material, r frm anther surce. Prviders are nt required t reprduce the wrding r rder f the template exactly, but must include links t the external rganisatins mentined. 13

38 SHOPPING AROUND CAN HELP YOU IMPROVE THE INCOME YOU RECEIVE IN RETIREMENT Hw d I shp arund? Using a financial adviser Financial advisers are qualified prfessinals wh can give yu individual advice n yur retirement incme. They can assess yur individual circumstances, talk yu thrugh yur ptins and recmmend a prvider that ffers the right prduct fr yu. Yu can find an adviser near yu at these websites; r [a suitable directry f specialist advisers will be added nce this is available] Yu may be able t access a financial adviser thrugh yur wrkplace and can use yur current financial adviser, if yu have ne. Using a cmparisn website The Mney Advice Service ffers a free and independent cmparisn website fr standard annuities which can be fund here; There are several websites which ffer a dedicated shpping arund service, allwing yu t cmpare and purchase different annuities ffered by different prviders, just like with mtr r travel insurance. Talking directly t the prduct prviders If yu want t talk t any prduct prvider abut what they can ffer, the Assciatin f British Insurers has cllected many f their cntact details here: [ What questins will I be asked? Questins abut yur pensin savings Yu will need t answer questins abut hw much mney yu have saved in a pensin. Yu shuld als be aware f any guarantees r restrictins that might apply t sme r all f this mney and f any ther pensin savings yu have with ther prviders befre yu select a retirement incme prduct. We have sent yu all the necessary infrmatin abut the mney yu have saved with us alng with this guide. If yu dn t understand what we have given yu, yu can cntact us and ask us t explain it r g t ne f the free and independent bdies listed n the last page f this guide. 14

39 Questins abut hw yu want t take yur retirement incme There are lts f different retirement incme prducts such as annuities r incme drawdwn, and lts f different ways in which yu may be able t take yur mney at the best time fr yu. Fr example, if the ttal value f all yur pensin savings is less than 18,000 and yu are ver 60, yu may be able t take it all as a cash lump sum. Yu shuld als cnsider whether yu shuld make sure yur partner (if yu have ne) is prvided fr if yu die befre them. We have included sme material with this guide explaining the different prducts available. Yu can get mre infrmatin and help with understanding it by talking either t us r the free and independent bdies listed n the last page f this guide. Questins abut yu Yu will be asked questins abut yu and yur partner such as hw ld yu are and where yu live, as these factrs may affect the level f incme yu receive. Als, if yu r yur partner answer yes t any f the fllwing three questins yu culd be eligible fr a much higher level f incme and will need t be prepared t cmplete a questinnaire abut any medical r lifestyle cnditins yu r yur partner might have. D yu smke? Have yu been diagnsed with a medical cnditin within the last 10 years? Are yu n any medicatin fr a health cnditin? Cnditins can range frm minr illnesses such as high bld pressure r high chlesterl right thrugh t mre serius cnditins such as a heart attack r strke. Yu can get the full questinnaire frm yur financial adviser, an enhanced annuity prvider, r frm this website Make sure yu r yur adviser is using the mst up-t-date versin f this frm. Yu might need t talk t yur dctr t get the details f any medicatin yu are receiving r treatment yu have had. Where can I g fr help? The Mney Advice Service is a great place t start. Yu can g t their website t find lts f infrmatin abut pensins and retirement incme prducts, and use their unbiased cmparisn tables t help yu cmpare annuity rates. Their Mney Advisers can help yu with yur mney questins n Calls shuld cst n mre than 01 r 02 UK-wide calls, and are included in inclusive mbile and landline minutes. 15

40 The Pensins Advisry Service als gives free and independent advice n pensins and has a free helpline yu can call n They als have an nline annuity planner that can help yu chse what srt f annuity is right fr yu: We can explain anything yu dn t understand abut yur pensin pt r the infrmatin we have sent yu. Yu can call us n r us at: [[email protected]] 16

41 Annex C - Cmpliance All ABI members must be cmpliant with this Cde as a cnditin f Membership. All CEO s f affected cmpanies must cmplete and sign the attached letter annually. Prviders must be able t demnstrate that they are assessing the impact f their cmmunicatins and prcesses n custmers retirement chices. T d this, they must: Mnitr custmer respnses t cmmunicatins abut retirement chices Cllect infrmatin n the number f retirement incme prducts being bught by internal and external custmers, if applicable If applicable, mnitr the number f days taken t cmplete the sale f an annuity, using the pints mentined n p.6 Share with the ABI the results f the abve exercises Submit a sample f cmmunicatins materials t the ABI, wh will cmmissin an external review f all cmmunicatins t assess effectiveness f the Cde in the first year after implementatin and in subsequent years if apprpriate. CHIEF EXECUTIVES COMPLIANCE LETTER If applicable, please return a letter n yur cmpany headed paper, including these paragraphs and signed by yur Chief Executive, by first Friday in March, annually t: Assciatin f British Insurers, 51 Gresham Street, Lndn EC2V 7HQ Retirement Chices Cde f Cnduct I can cnfirm that [XYZ Cmpany Ltd] cmplies with the ABI Retirement Chices Cde f Cnduct. I have caused checks t be carried ut t cnfirm that ur prcesses and cmmunicatins meet the rules set ut in the Cde and I have taken apprpriate actin where any shrtcmings have been identified. [Signed] Name Cmpany r cmpanies cvered by the letter 17