The pension annuity “open market” option can be defined as being able to shop around a variety of providers for the best annuity deal. Around 300,000 people retire each year in the UK, but it is estimated that around 66% of those do not bother to shop around the find the best deal. The open market option was born out the Finance Act of 1978. Anyone who wishes to take it up must do so before taking anything from their current pension provider, (annuity payment or lump sum for example)
The legislation created competition in the market for annuity providers, thus encouraging annuitants to shop around for the best annuity quote. However despite this, more people DON’T shop around that DO, even with pension fund administrators duty bound to tell their customers that better deals may be available that the standard life annuity. The FSA oversee and regulate pension annuity selling and stipulate that providers must explain what the open market option is.
Some of the options on the table include conventional annuities, lifetime annuities, impaired life annuities, flexible annuities, variable annuities, enhanced life annuities, with profits annuities, and inflation proof annuities.
As you can see there is a bewildering amount of choice available when you come to enter retirement. You should consider each option carefully and think about a number of factors including your health and how much or how little risk you want your income to be exposed to. In all cases seek professional, impartial financial advice.
Related posts:
- Get a better retirement income using the open market option
- More information needed on the open-market option for annuities
- Open Market Option annuitants 50 times as likely to gain enhanced rates, Say ABI
- Retirees could lose over 50% of their income by not using the Open Market Option (OMO)
- Open Market Option (OMO) more vital than the earnings/pensions link
