Do I have to buy an annuity from my current pension provider?
When it comes to choosing a pension annuity, the market understands that it can be one of the most important decisions that you make and therefore the Government has stepped in to ensure that all retirees have a fair option to choose between competing annuity companies to find the best deal for their individual situation and for their family.
With the introduction of the Open Market Option (OMO) in 1975, retirees no longer have to choose their current pension provider for their annuity, even if they have held their pension with a certain company throughout their lifetime. This allows for the market to be increasingly competitive as independent annuity companies vie for the attention of consumers, which in turn drives prices down and helps to promote healthy options for almost all individuals.
What options do I have?
When it comes to choosing an annuity you have the option of any pension provider that you can find. In turn, this means that taking the time to shop around and have a look at what different providers have to offer can really benefit your finances in the long term. There are a range of options available to all retirees which focus on different aspects of our lifestyle – for example some companies offer better packages to people who have poor lifestyle habits or a poor level of health – and in turn, these can provide better benefits to certain individuals.
Is it a benefit to shop around for pension annuities?
Shopping around for annuities can really make you money in the long term and finding the right package for your individual situation can see your pension pot really grow with you. Taking the first offer that you see could see you lose a great deal of money out of your pension pot, compared to what you could gain by taking the time to shop around and find a deal that is really tailored to your needs and your individual situation.
What is the Open Market Option and how does this affect my choice?
Introduced in 1975, the Open Market Option is a Government initiative which promotes competition between pension annuity companies to provide a good service to customers. It prevents pension companies from locking their clients into annuities, instead allowing retirees to choose between several different annuity companies.
The OMO is a crucial option available to retirees because once an annuity has been chosen it is usually a lifetime commitment.