Small pension funds and getting the best pension annuity rates is becoming a concern in the pension and annuity industry. While increasing uptake of the open market option (OMO) will do a lot to improve many people’s retirement income there are concerns for smaller funds, especially when you consider that the average pension fund in the UK still stands at about £27,000 and many financial advisers are not able to transact such business on a cost effective basis. Either there just isn’t enough commission or the retiree can not afford to pay a reasonable fee for the advice required.
As a result, many retirees have little choice but to stay with their pension provider for their annuity, and very often not with the best annuity rates, far from it. One answer could be to establish a register of advisers who are willing to transact these smaller funds. This could be an important step forward. Aston Goodey, from leading enhanced annuity provider, MGM Advantage, says that the key thing to recognise is that there are now financial advisers willing to go down to the minimum, adding that one objection to the OMO has been who will service the small funds, but MGM are now seeing a number of advisers developing systems that allow much smaller funds to be broked at a profit. They can now see new avenues developing and are seeing the market evolving quickly as retirees are alerted to the fact there are advisers who will deal with them.
