The Treasury wants the open market option for best pension annuity rates in the UK, and has issued an ultimatum to insurers. The new coalition government has issued an ultimatum to the Association of British Insurers (ABI) over its opposition to the utilisation of the open market option, according to information from Professional Pensions. Apparently, a well placed source claimed government officials had informed the ABI, whose overall membership includes a large number of annuity providers, to provide them with compelling evidence as to why the open market option shouldn’t become the default option for pension savers at retirement.

Hargreaves Lansdown’s Tom McPhail, the current chairman of the Pension Income Choice Association (PICA), said the Treasury had actually been very receptive to the organisation’s ideas on the open market option. He commented that although clearly nothing’s set in stone, the tone of the communication he’d heard from within the ABI suggests that all the relevant government ministers and Treasury officials have bought their argument that the open market option should be made the default option. He added that he he expects the ABI to attempt to pursue the status quo if it can.

An ABI spokesman stated that the ABI and its members are committed to making the process of shopping around using the open market option for the best pension annuity rates as straightforward as possible, adding that the ABI continues to work with its’ members, government and other organisations to help consumers understand the decisions they need to make when they reach retirement about their pension savings, and to improve the customer experience when having to make those those decisions.

Third way variable annuity sales are close to £450 million in the first half of 2010, an increase of 34% compared to the 2nd half of last year, according to research by consultants Towers Watson. The value of these variable annuity sales changed little between the first two quarters of this year, at £222 million and £223 million respectively. Andy Sanders, from Towers Watson, stated that it is encouraging that there has been an increase in sales compared to the second half of last year, adding that those sales were much reduced relative to the first half of last year, prompted by product redesigns and the exit of the Hartford from the variable annuities market place as a result of the impact of the financial crisis.

According to Towers Watson, third way annuity products could be appropriate for a sizeable segment of consumers both approaching and actually at retirement and therefore present a significant commercial opportunity for various product providers. Andy Sanders said that currently, reaching the 2008 and  2009 billion pound of sales of variable annuities is looking  challenging for this year. A variable annuity is a unit-linked investment product with built in explicit guarantees, and is currently available from a small number of product providers, either as a pension or as a life assurance bond. The products vary in the way they are constructed and to the type of consumer they appeal to and when available in a pension wrapper they are usually designed to provide regular payments that are guaranteed not to fall, but may also rise if investments outperform.

Getting the best pension annuity rates is simply not enough these days, as many hard up retirees are having to plunder their savings. Unfortunately, retirees and those soon to give up work are increasingly having to dip into their hard earned savings and investments to help them pay their seemingly ever increasing day-to-day expenses. With the fallout from the recession continuing to effect people, around 30% of UK adults have used their savings and investments to supplement their ongoing monthly income over the last 12 months, according to Schroders. Collectively, this amounts to an estimated £60 billion.

On average, those who have tapped into their savings and investments have spent around £4,600 in the last year. More women than men were forced to take money from their savings. However, it is those people who are already retired or approaching retirement who are most likely to have made withdrawals to make up a shortfall in income. Those nearing or in retirement have less opportunity to rebuild their savings and their declining annuity income proves insufficient to cover their day to day expenditure, even if they managed to secure the best annuity rates.

In order to make the most of your money when you reach retirement, it is essential to shop around to find the very best pension annuity rates available. Why not start your annuity research today, it’s never too early? We can offer you the opportunity to try out our online annuity calculator to find the best deal.

Delays in transferring pension savings into the best UK annuity rates and a higher retirement income is proving costly to retirees. The Origo Options pensions industry initiative has helped to reduce the average time it takes to transfer a hard earned pension fund into an annuity income to 11 calendar days, down from the previous high average of 31 days. However, Virgin Money has recently calculated that a delay of just seven days in transferring a pension fund of £100,000 could cost retirees dear in terms of lost annuity income.

A 65 year old man receiving an annuity income of around £6,600 from his annuity could miss out on about £125, while a woman could lose out on around £120. However, with the worst offenders taking as long as 51 days to complete the transaction, the ensuing ten week delay could cost men around £1,270 and a woman £1,200. Buying an annuity is a once in a lifetime financial decision which retirees have to literally live with, comments Virgin Money’s Grant Bather. He adds that the annuity income is fixed for life and there are no second chances, and, if a person misses out on the highest UK annuity rates then the loss is compounded.

It is crucially important that retirees shop around to find the best annuity rates from across the whole of the market, rather than simply choosing the annuity on offer from their current pension provider. Why not start your annuity research today? Give us a call and see just how much extra retirement income we can find for you.

When you buy your pension annuity, make sure you get the best UK pension annuity rates. Annuity rates are predicted to fall for the rest of this year, so it is crucially important that you seek out the best annuity rates for your all important retirement income. This can only be done by shopping around between different annuity providers using an annuity service such as this, and utilising the Open Market Option (OMO). Unfortunately, most people do not shop around for higher annuity rates, which means most people are not offered the best annuity rates available. The problem is that these people are actually unaware that they can shop around.

So while we are used to comparing the costs and premiums of other financial products such as mortgages, loans, car insurance, credit cards etc., due to the lack of understanding of an annuity purchase, most retirees end up sticking with the first offer of UK pension annuity rates from their existing pension provider. P.I.C.A have suggested that this situation could be improved somewhat if there was a ‘pension passport‘ system where some brief details of each potential retiree could be documented and then that person could more easily shop around between different annuity providers.