While the code should stimulate demand for advice, intermediaries will still face competition for the clients they want from each other, from direct providers and also increasingly from major high street players such as the Nationwide which has already set up an annuity service.
Intermediaries are in a good position to benefit from the shift of the annuity market away from single-solution standard annuity rates towards more personalised solutions that are medically underwritten and perhaps blend a number of retirement options. Technology is obviously playing a key role in opening up the market and bringing cost-effective solutions to a wider range of consumers. The ability to collect information, search for quotes and complete administration electronically will reduce time and costs. Yet the large sums of money, the time scales and the irreversibility of the decisions will make the majority of people seek out the reassurance of expertise and experience rather than being happy to click and buy online.
In the coming months there will be a great deal of scrutiny on whether the code is succeeding in delivering improved outcomes for those people entering retirement. The ABI is monitoring effectiveness of the code and has promised to review its impact after one year. As part of its commitment to greater transparency it is also set to publish annuity rate tables allowing for better comparisons, an area the FSA is also scrutinising. The code is definitely a step in the right direction and this is one story that is set to run and run.
Stephen Lowe is group external affairs and customer insight director for Just Retirement
Key points
Last year the retirement income market exceeded a record £15bn, a number that is expected to keep increasing as the population ages and more people reach retirement.
Pension companies will no longer be able to send annuity application forms until after there is contact with the customer and a number of key mandatory questions have been answered.
Intermediaries are in a good position to benefit from the shift of the annuity market away from single-solution standard annuity rates towards more personalised solutions.
