There are calls for life offices to renew their efforts regarding the open market option (OMO), the right you have at retirement to shop around with your pension pot to find the best annuity rates.
In an update of the Treasury’s review of the OMO, it says it will continue to monitor ongoing progress in the operation of the OMO. With reference to the Financial Services Authority’s (FSA) open market option review earlier this year which found 30% of retirees buying a pension annuity were unaware of the option, the report stated that life offices must renew their efforts to ensure that those people approaching the time to buy an annuity aware of the OMO and sources of information to help them make an informed choice.
The Treasury did acknowledge that the Association of British Insurers (ABI) was working with life offices to promote customer awareness and improve their pre-retirement wake-up letters. It said it was important that people coming up to retirement understood the importance of buying the right annuity product and how they could shop around for the best annuity rate, and it wanted the process of switching providers to be made as quick and easy as possible.
Rachel Vahey, from Aegon Scottish Equitable, has stated that there have been improvements in the pensions industry regarding this matter in both committing to raise awareness of the benefits of shopping around for the best annuity rates and in making pension transfers faster and simpler.
Having said this, there is still more to be done.
