Retirees could be set to benefit from improved retirement income following a reported shake-up in the way annuities are sold.

The Guardian has revealed that the Association of British Insurers (ABI) is set to release a new mandatory code of conduct for pension providers, which should help ensure consumers are getting the highest return on their annuity.

Under the new proposals, retirement income providers will be required to ask their customers a series of questions to determine the best type of annuity for them.

During this questionnaire, policyholders with health conditions will also be informed on whether they could be entitled to a better performing annuity, known as an enhanced annuity.

A recent report from the National Association of Pension Funds showed that a healthy person who opted for the best annuity rate available on the open market would get 12 per cent more retirement income than if they chose the poorest performing policy.

This difference is even more pronounced in the case of enhanced annuities, with Just Retirement figures revealing that those with poor health could significantly increase their income with an enhanced annuity, with the typical uplift between 20 per cent and 25 per cent.