Money News
Consumers will get help to make informed decisions about turning their pensions savings into a retirement income, following the outcomes from the Open Market Option (OMO) review announced at the 2007 Pre-Budget Report.
The OMO allows an individual to shop around for the best annuity deal to suit their individual circumstances. Evidence shows the majority of people buy an annuity from their existing pensions provider. This could or could not be the right decision.
The joint HM Treasury and DWP-led OMO review worked with stakeholders to see what steps needed to be taken to enable annuity buyers to make the best decision when purchasing an annuity.
The Pensions Advisory Service (TPAS) will set up a web-based structured choice tool to guide individuals through their retirement income options, including choosing the most appropriate annuity for them, for example a single or joint life annuity. Stakeholders will be involved with TPAS in developing and publicising the tool, which will be linked with the FSA comparative tables.
Meanwhile, City watchdog, the FSA (Financial Services Authority), will review key aspects of the OMO market against its 'Treating Customers Fairly' principle that would include looking at delays in OMO transfers between providers.
Finally, the DWP will lead on facilitating the development of better-focused information on the lines of the structured choice approach, again with the close involvement of stakeholders.
The Treasury will report annually at PBR on a range of relevant indicators to assess how well the OMO is operating.
The Review worked with a broad range of stakeholders, including the Association of British Insurers, the Financial Services Authority, Which?, the Equal Opportunities Commission, Age Concern England and The Pensions Regulator.
Commenting on the outcome, Ian Owen, Chairman of Partnership, says: "It's a fact that we are living longer in retirement than ever before but lower annuity rates mean people have to save a lot more to get the same level of income in retirement.
"The majority of retirees can enhance their retirement income simply by shopping around, and this is particularly true if they are amongst the many people who suffer from everyday medical complaints that would qualify them for an enhanced product, where the financial uplift would be even greater."
12 October 2007 © Moneyextra.com
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