The open market option for a pension annuity
The ABI has published guidance to assist people buying pension annuities. It has targetted insurance companies, getting them to improve marketing material to consumers approaching retirement but advisers and campaigners have questioned whether this is enough. This new annuity guidance has been published in the same week the DWP found yet more damning evidence about the standard of provider OMO literature.
The research found much of the information consumers received from providers was misleading and confusing. The DWP is expected to recommend a clearer and more timely provision of information from providers, including a single document explaining key decisions and increased awareness of the need for independent financial advice.
The ABI says its new guidance will ensure consumers are given a clear brief summary of the Open Market Option. Hurray for that!
ABI director of life and savings Maggie Craig says: “Buying an annuity is a once in a lifetime decision that can’t be changed, so it’s vital that customers are given appropriate help to make the right choices, and make the most of their retirement income.
“The next step of our project is to improve the time it takes for annuity payments to be made. An industry initiative to find new ways of speeding up payments already has the majority of providers on board. Further details of this will be announced later in the summer.”
Living Time is running a campaign entitled ‘Offer More Options’ which is inviting opinions from advisers, providers and commentators. Again, they state that for many people retirement is the single biggest investment decision of their lives.
According to the ABI, about 93 per cent of retirees buying a retirement income stream - about 400,000 individuals with £11 billion of pension savings - opted for a lifetime annuity in 2007.
August 23rd, 2008 at 4:37 pm
Nice blog, thanks.