Plans to improve annuity choice unveiled

The Association of British Insurers (ABI) is to stop its members that sell consumers a regular income in return for their pension pot, known as an annuity, from including annuity application forms with information packs that are typically sent just before retirement.

Many people simply complete the form, rather than finding a better deal which could cost them thousands of pounds in lost income.

The ABI says a third of people do not search the market for the best annuity.

'Nowhere near enough'

However, financial advisor firm Hargreaves Lansdown says the initiative "does not go anywhere near far enough towards ensuring good outcomes for retiring pension investors".

It states pre-retirement packs should not even include an annuity quote, as that is still likely to encourage consumers to accept it, and instead scouring the market should be presented as the default option.

Tom McPhail, head of pensions research at Hargreaves Lansdown, says: "What the ABI is proposing is a fudge rather than the fundamental reform needed to encourage more people to shop around.

"Consumers only get the chance to buy an annuity once, after which they are locked in. The pensions industry should be taking all possible steps to ensure they are getting the best deal."