The Association of British Insurers (ABI) has launched a code of conduct which aims to force providers to do more to help consumers get the best possible annuity.
The much trailed code will force providers to start giving consumers information about pension options two years before they are due to retire, and encourage shopping around.
The code, which must be adhered to by ABI members, aims to help 400,000 people who buy an annuity each year better understand their options at retirement, choose the right annuity and shop around for the best deal, through information provided by insurers.
The ABI said it would monitor the effectiveness of the code and review its impact in 2014.
The trade body will also publish specimen annuity rates offered by a range of different providers.
The code won praise from economic secretary to the treasury Sajid Javid who said it was necessary to boost trust in pensions.
'We need to continue to work together to improve the pensions landscape' he said. 'I have been impressed by the way so many stakeholders in the pensions industry have come together to focus on the issues facing consumers.'
However, Tom McPhail, Hargreaves Lansdown head of pensions research, who is also chairman of open market option campaign group the Pensions Income Choice Association, said the code should have gone further and made shopping around for an annuity the default option for retirees.
‘I would still like people take their pot out into the market to shop around,' he said. ‘We now have something to build on.’
Otto Thoresen (pictured), ABI director general, said the code would help people make decision with more confidence.
‘This code is the latest initiative in the industry’s commitment to helping meet customers changing pension needs,’ he said. ‘The timely, clear and relevant information provided under the code will significantly increase the number of people reaching retirement with the confidence to make the right pension decision.’