Do I have to buy an annuity through my pension provider?
Purchasing an annuity is one of the most important decisions that a person can make in their life, after all they are investing all of their hard-earned pension money into an income which will be provided to them for the rest of their lives. In general, annuities are selected before the age of 75 so this does gives retirees plenty of time to consider the options available to them, and workout where their best annuity income could come from.
Although many people believe that annuities must be purchased from an existing pension provider this is simply not the case, in fact in every situation a person can choose from a wide range of annuity providers and shopping around with this provider can see a real difference in the amount of annuity income that a person could receive.
What is the Open Market Option?
Introduced in 1975, the Open Market Option is designed to give every person a fair shot at the annuity market, by providing them with the option to shop around for their annuity, getting the best rate available for their individual needs. The Open Market Option works to benefit the annuitant as it promotes competition within the marketplace and encourages annuity companies to battle it out for the investments of new annuitants, driving down costs and making it a more appealing market.
The Open Market Option also encourages annuitants to shop around for options which they might not be aware are available to them. This can include the Enhanced Annuity option which is available to people who may suffer from long-term illnesses or poor lifestyle habits, as a result they could be entitled to a higher annuity income on the basis of a shorter predicted lifespan.
What are some benefits of shopping around?
Shopping around for an annuity can help improve the annuity income of both individuals and couples by quite a significant amount. It can help people to find an annuity income or plan which is tailored to benefit their specific needs or retirement situation and in return this can provide them with a higher annuity income.