The Open Market Option (OMO) review group was set up by the Treasury and has been making progress according to its founders. It said there was progress over the “provision of information for those choosing an annuity”. They point to the increase in the amount of traffic going to the FSA Moneymadeclear website which features annuity tables, some 228,000 visits in all. They also said that there had been improved guidance from the ABI about the OMO and that average annuity transfer times were down from 31 days to 11.
Some in the industry were skeptical over these alleged improvements in the pension annuity system. Steve Lowe of Living Time said that “The latest ABI statistics show the numbers exercising OMO have fallen back once again towards the long-term average of around one-third of all retirees, while the Pension Regulator report showed that members of occupational money purchase and Additional Voluntary Contributions (AVC) schemes were far less likely to use their OMO than even this low average.”
He called for new rules that would force pension providers to offer alternatives to stop retirees being railed roaded into their default annuity option offered by their current provider, that could cost them thousands of pounds in lost retirement income. It is estimated that around£14 million is currently being lost as a result of annuitants not shopping around.
