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Open Market Option

Many people retiring in the UK over the next few months will have received information about their pension fund from the provider, including details for buying annuities.

The provider's annuity offered, however, may not be competitive and an open market option could add up to 30% more pension income each year for the rest of the annuitant's life.
An open market option means an annuitant is free to buy a compulsory purchase annuity (or pension annuity) from any provider in the market, and this applies to a With Profits annuity as well as a standard annuity.

In 2002, of the 327,191 retiring who could consider an open market option, 2/3rds did not shop around to find the best annuity. Many could have received extra income by up to 30%, worth thousands of pounds every year for the rest of their lives.

Buying the right pension income is very important as once bought, annuities cannot be switched to another annuity provider, cannot be changed to a different type of annuity and cannot be altered in any way for the rest of the annuitant's life. Once the capital from the pension fund has been spent on an annuity, there is no opportunity for any of this capital to go to a beneficiary on the death of the annuitant.

There are many aspects to the retirement options. These could be the features that can be added to an annuity, whether an individual suffering from ill health, is a smoker, diabetic or is overweight could benefit from an enhanced annuity or even an impaired life annuity, whether other options are more appropriate such as phased retirement of pension drawdown and how to select the best annuity rates offered by providers which can change from one week to the next depending on their cash flow requirements.

If you would like further information or a quotation on your OMO please contact us.