Tips for Getting Better Advice on Pension Aign Up-Secrets Revealed
Pension Annuity is a financial product which offers retirees a guaranteed income from their pension savings. In exchange for transferring your pension pot to a life insurer, policy holders will receive a fixed income until they die. The company is testing the water by taking 100 test cases of annuitants who had bought without using an Open Market Option (OMO) to the Financial Ombudsman Service (FOS). The issue of OMO is a contentious one within the annuity industry. Groups such as the Pension Incomes Choice Association (PICA) have long argued there needs to be wholesale reform on how annuities are sold in the UK. They advocate that the Open Market Option (OMO) be made the default and have touted the idea of a ‘pensions passport’. To get more on the subject for more.
Essentially each retiree would then be able to ‘shop’ between providers armed with the necessary information about their personal circumstances. On the other side of the coin you have some (but not all) of the leading insurers who are represented by the ABI. The ABI have in the past argued that there have been substantial improvements in the information offered to would-be annuitants.
However, there have been serious issues, as highlighted back in 2008 by the Financial Services Authority. They found that in 40% of cases, the information offered did not give an adequate explanation of why the OMO is important in terms of maximising retirement income. Hargreaves Lansdown, the UK largest annuity broker said that they had experienced cases where the annuitant had managed to increase their income by 60%. The ABI themselves admit that only about 10% of those that qualify for annuity enhancements actually get them. These are for people who have medical issues or who smoke/drink on a regular basis. Because they are deemed to have a lower life expectancy, insurers offer them better rates. However, even minor ailments can boost ones income, in fact there are over 1,500 individual medical problems that can lead to qualification for better rates.