Nationwide supports more shopping around for retirement options
A new code of conduct designed to encourage people to shop around for their annuities is being welcomed by Nationwide Building Society, a year on from the launch of its own annuity service.
The new Association of British Insurers (ABI) code, fully supported by Nationwide, comes into effect on March 1st 2013. It is designed to highlight the ways in which customers can ensure the best possible retirement, offering a choice of annuity providers through the open market option (OMO) and enhanced annuity options.
Since launching its annuity service, Nationwide annuity customers are on average 17% better off as a result of shopping around, representing a monetary value of an average extra annual income of £338.87. This equates to £6,438.53 over 19 years, the average life expectancy after the age of 65. The greatest uplift achieved for an individual customer of Nationwide's Annuity Service was 103%.
Nationwide has also secured 51% of all annuities on an enhanced rather than conventional basis. The industry average indicates that approximately 25% of annuities are currently secured at an enhanced rate when customers shop around on the open market. Only 1%-5% of sales are enhanced where customers remain with their existing, or ceding, pensions provider.
Nationwide's Annuity Service is available to all customers approaching retirement with a total pension pot from £18,000. It offers access to a panel of leading providers, encourages customers to shop around for the best annuity option available and, where certain health conditions permit, directs customers towards potentially enhanced annuities for a higher monthly income.
In order to make sure customers can make the most appropriate retirement income choices, the ABI code requires that key changes to the way those options are offered must be implemented by pensions providers.
These include:
The information provided should encourage shopping around for the best retirement options
Communications by providers must be clear and consistent, to enable customers to make informed choices about annuities
The information must guide and support customers to maximise their retirement income, providing details about wider market options, including enhanced annuities
Customers should be signposted to advice and support from both regulated advisers and government backed advice services
Providers will no longer be allowed to include an annuity application form within their information packs, promoting active choices for the best retirement options
John Wilkinson, Nationwide's head of protection and investments, said: "Nationwide launched its annuity service a year ago to plug a gap for customers wanting to access trusted advice on the high street so that they can maximise their retirement incomes. Since then, it has become abundantly clear how important is it not to take the first option offered but to shop around and what a huge improvement can be made to people's retirement income as a result.
"It is absolutely vital that customers making such a key financial decision, which will determine their level of income in retirement and cannot be reversed, have all the information and help they need to reach the right decision for them. By shopping around, getting advice and making sure they disclose any medical conditions, they can not only secure the highest rates but also shape their own annuity to include spouse benefits or guarantees, making the most of their pension pots in retirement.
"We have wholeheartedly embraced the principles of the ABI code of conduct and the efforts to enhance transparency, increase customer choice and ensure that those retiring can maximise their income."
Nationwide's annuity service is available on an advised or non-advised basis and outlines customers' financial options in retirement and supports them throughout the application process.
It provides access through The Open Market Annuity Service to a panel of leading annuity providers, carefully chosen and regularly reviewed by Nationwide on the basis of their financial strength, customer service and competitive rates. There are currently six on the panel: Aviva, Canada Life, Just Retirement, Legal & General, LV=, and Partnership.