The annuity industry needs to move to individually underwritten quotes for all policies, similar to the protection market, Aviva has recommended in its Rethinking Retirement in the UK 2013 report.

While the number of enhanced annuities taken by individuals has increased recently, Aviva has called for an industry-wide campaign to educate people that providing medical information will only ever increase the annuity income on offer from providers.

The report highlighted the need for appropriate levels of guidance and advice, as while the retail distribution review (RDR) has made costs more transparent, “the cost for non-advised services is not always clearly articulated and transparent for customers, so in some cases customers who opt for a lower level service may end up paying more for this than they would for full advice”.
Another recommendation in the report was to increase customer protection by making guarantees the ‘default option’ for all annuities, as Aviva has done with the introduction of the annuity value protection promise. If an annuitant dies within 90 days of buying their annuity, Aviva will return their annuity premium to their estate, less any customer payments that had already been received. If the annuitant dies after 90 days, but within one year, Aviva will continue to make annuity payments to the estate for the remainder of the first year.

Although the principle of all annuity providers publishing their rates was included in the ABI Code of Conduct, the actual mechanism for doing so is yet to be finalised, so Aviva has urged the industry to quickly commit and implement a process for this.

Other recommendations in the report included reducing the cost of switching providers at retirement and increasing awareness of the option to combine multiple pension pots.

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