Open market option for best pension annuity rates being hidden, and therefore retirees don’t get the best pension annuity rates at retirement. Insurance companies are advertising the open market option (OMO) but are hiding the important details of it within their product literature, according to Lighthouse Group. During a recent panel debate at FT Intermediary Forum (FTIF) questions were raised about why the OMO was failing to get more retirees to shop around for the best annuity rates, at a time when getting an increased income in retirement is really important.
Andy Gadd, from the Lighthouse Group, said while insurance companies were meeting regulatory requirements and advertising the open market option they were not highlighting it very well and were still making it the easy option to for retirees to stick with them at retirement, therefore getting less than best pension annuity rates, and a lower income. Interestingly, his mother bought an annuity a few years ago and she didn’t consult him, let alone take the OMO. He suggested that, at the end of the day, it is about educating people from the start. It is the easy option for people to stay where they are. His mother just signed the application form because she didn’t want to bother her son and as a result she ended up with a worse annuity rate.
