Open Market Option annuitants 50 times as likely to gain enhanced rates, Say ABI
Savvy annuitants who have had the wherewithal to shop around for an annuity (called using the open market option), are 50 times more likely to enjoy enhanced rates compared to those who stuck with their default provider. That’s according to data released by the ABI, who show just how important it is to try other providers before purchasing an annuity. Tom McPhail who works for the Pension Income Choice Association (PICA) said this demonstrated that there were “clear advantages” to the open market option.
Just half a percent of annuitants who stuck with their current provider were offered enhanced annuity rates compared to 24% of those who shopped around between providers for the best deal on an annuity. Staggeringly, take up of the open market is actually falling, in Q3 of 2009 the take up level was a measly 34%. This compares with a figure 37.5% in quarter 3 of 2008. This clearly shows that the pension annuity industry needs to do more to inform annuitants that they can get a better deal by shopping around. And now pension experts are pleading with the government to be much more proactive in ensuring annuitants get the maximum possible income in retirement.
