Those approaching pension age will receive a greater level of support to get the best possible retirement income under a new Code of Conduct introduced yesterday by the Association of British Insurers.
Figures from the ABI show that a third of people do not shop around for an annuity when they reach retirement and may subsequently be missing out on a better retirement income or annuity rate.
Many retirees who have a medical condition, or make certain lifestyle choices could also be missing out on a better rate that they could get through an enhanced annuity according to the ABI.
It is hoped that the new code of conduct will ensure customers are given access to information that will enable informed decision making when it comes to purchasing an annuity.
The ABI represents 300 members in the insurance, investment and long term savings industry, which account for around 90% of premiums in the UK market.
The compulsory code of came into force yesterday, and carries a deadline for implementation by ABI members scheduled for 1st March 2013.
ABI members will be required to provide clear, consistent and transparent information to help retirees find the best annuity for their needs. The code also says that providers should "prominently highlight enhanced annuities" whether they offer them or not, and "clearly signpost customers to advice and support" from regulated advisers and government backed organisations.
Chairman of the Pensions Income Choice Association, Tom McPhail, said:
"Everybody needs to shop around so that they can make an informed decision about what type of retirement income will best suit their needs and to ensure that they are not missing out on a higher income.
"With the code of conduct, we are now making real progress in meeting the needs of the hundreds of thousands of pension investors every year who rely on the pensions industry to help them through the retirement process."
Otto Thoresen, Director General, ABI said:
"These changes are a big step forward for customers at retirement and were informed by extensive consultation and consumer research. Improved processes, better signposting and transparency will combine to make customers more confident and more able to make decisions about their retirement income.
"This is not the end of our work helping customers to get the best deal at retirement; we will continue to work with key stakeholders including Government and the advisory community to improve the customer experience."