Britain’s insurers seek to head off criticism

ABI members sign up to new code

LONDON, Feb 26, (RTRS): Britain’s insurers have pledged to help pension savers find the best deal for their retirement, following criticism they have not always done so in the past and the launch of a review by regulators.

The Association of British Insurers (ABI), whose 350 members run some of Britain’s biggest pension schemes, said on Tuesday its members had all signed up to the new “ABI Code of Conduct on Retirement Choices”.

The code requires insurers to spell out options for buying an annuity — which converts pension savings into without ever, ever taking our eye off medium-term inflation expectations.”

Tucker was considered the frontrunner to take over as the bank’s next governor this year until the surprise appointment in November of Mark Carney, currently head of the Bank of Canada.

He is also seen as tolerant of inflation remaining above target and economists expect possible changes in the bank’s approach to reviving growth when he takes over in July.

Tucker on Tuesday raised the possibility that the BoE could charge banks to hold their money, a move which could encourage them to lend it to com- retirement income — up to two years before an individual retires.

Britain’s Financial Services Authority said in January it would review whether people who buy an annuity directly from a pension provider pay more than those who shop around.

ABI members will contact people approaching retirement with details on how to combine small pension pots, the different ways to take retirement income, and protecting against inflation.

UK insurers have been accused of fail- panies growth.

“I hope we will think about whether there are constraints to setting negative interest rates,” he said when asked about possible new options for the bank. “This is an idea that I have raised. This would be an extraordinary thing to do and it needs to be thought through very carefully.”

The central bank joined forces with Britain’s government to create a new Funding for Lending scheme last year with a view to boosting lending by lowering the costs of capital for banks. But so far it has failed to have a big impact on lending to companies.

instead,

possibly

boosting ing to tell customers that they can shop around for better value annuities from rivals — which in some cases can pay over 15 percent more income for life.

There is an income gap of up to 16.2 percent between the most and least competitive annuities currently available for 65 year-old retirees, financial data firm Moneyfacts said.

The ABI’s code comes amid a prolonged decline in average annuity incomes as insurers pass on a drop in the returns they make on their investments in government bonds.

But independent annuity advisers

The bank’s policymakers saw “drawbacks” when considering cutting interest rates to zero or below in the past but would continue to consider them along with other options, according to minutes of their February meeting published last week.

Tucker also said he was looking at how to increase smaller firms’ access to working capital.

“I would simply like to explore whether or not some kind of working capital finance instrument could be rejuvenated.”

Tucker added his voice to suggestions from top policymakers that the pound may need to weaken more to Annuity Direct say the ABI’s code is not strong enough to protect consumers or encourage shopping around.

“The Code plans to send information to consumers that are superfluous, confusing and unhelpful,” Alan Highman, chairman of Annuity Direct, said in a statement.

The ABI has beefed up its scrutiny of pension and insurance organisations, such as Aviva, Axa and Prudential.

In January, it drew up an agreement that would force its members to reveal fees and charges taken from employees’ retirement savings. help British exports. “As a matter of analysis ... we believe that the real exchange rate needs to fall, compared with where it was a few years ago, to get the necessary rebalancing in the economy,” he said.

The pound fell after Tucker’s comment, approaching levels it touched on Monday after Britain lost its AAA rating by Moody’s. The pound has been weakened recently by the growing expectations of the Bank of England printing more money.

Tucker said the benefit of a weaker pound, such as boosting exports, would vanish if inflation expectations rose too high.