Recently we published a news story about the Association of British Insurers (ABI) and its propsals about a 30 day pension annuity transfer guideline…the time taken for one insurance company to transfer a pension fund to another insurance company when the retiree decides they can get the best annuity rate with the other company. For clarity, this is known as shopping around for the best annuity rate utilising the open market option (OMO).
For clarity on the position, retirees should expect the transfer of annuities (or the pension fund monies) to take “well below” 30 days rather than it being the standard, according to the ABI. This is in response to concerns by Virgin Money that pension savers needed increased protection against annuity transfer risks. The ABI saying that the 30-day timeframe was the “absolute maximum” rather than a target.
The financial services industry as a whole should be doing everything possible to make the transfer of pension funds process as smooth as possible so customers receive the best possible annuity payout.
The ABI is stating that it expected the average transfer time to be significantly lower than 30 days and that this maximum would be reduced over time. The point is 30 days is not meant to be a benchmark. It is what the ABI expect to be the absolute maximum.
Anything that can be done to improve the pension annuity transfer process is good news for retirees.
