Retirement
UPDATED: Sample annuity rate table launched to ease shopping around
Consumers looking for the best annuity option will be able to compare rates from a range of providers from today (Wednesday).
For the first time the Association of British Insurers (ABI) will publish sample annuity rates on its website from across the whole market to help highlight to consumers the importance of shopping around for the best product.
The comparison table can be viewed here.
The move follows the introduction of the ABI’s Retirement Choices Code in March which mandated all its members to publish their annuity rates.
Writing in the Daily Mail, Otto Thoresen, ABI’s director general, said: “Buying an annuity is one of the most important financial decisions many of us ever have to make, and no-one is pretending it is risk-free or easy.
“Those who fail to get the best deal for themselves will be worse-off for the whole of their retirement as a result. Many consumers may not realise just how much disparity there is amongst the products on offer.”
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Thoresen also said it may be time for a more “fundamental review” of how solutions to the retirement income challenge can be found in a world of low interest rates and longer lives after work.
“Government and the regulators, along with the pensions industry, need to identify where the best solutions can be found. The industry would be an enthusiastic participant in such a debate.
“The rate savers are offered when they buy an annuity now are lower than they were when inflation and interest rates were soaring in the 1990s – interest rates have fallen from a high of 15 per cent in 1990 to only 0.5 per cent today – and people are living much longer now too.
“The pensions industry cannot change the economic weather – it is not in our gift to increase interest rates or improve the underlying strength of the economy. And although automatic enrolment is helping many start saving, the pensions industry cannot force anyone to save more – and nor should we.
“What we can do, and are doing, is help everyone realise they have a choice at retirement and enable them to exercise that choice in a way that is right for them.”