Open Market Option Campaign
Harriet Baldwin’s campaign to reform the Open Market Option (OMO) has been backed by the Pension Income Choice Association (PICA).
Most people who have been saving for a pension fund through a pension company will arrange an annuity through the same supplier. This may not be the best solution and they should be encouraged to “shop around”. The Association of British Insurers (ABI) has taken a decision to ban annuity application forms being provided with pension policy literature, with the view that if the form isn’t there the client will then try to find an annuity which suits them. The pension provider can, however, provide a quote.
PICA say this isn’t enough to encourage OMO.
Harriet Baldwin is taking the issue to parliament through the Pensions Bill. She wants it to be made more commonly known and is hoping that requesting that it is incorporated into the bill will raise the profile of OMO. It is not anticipated that it will make the final draft of the Bill but makes the issue more common knowledge.
The issue here is that people aren’t aware that there are options for them. It is too easy to get the literature from the existing pension supplier and just accept it and carry on. The removal of the application form will help this as it adds an additional step to the process but by providing an annuity quote will in many cases be enough for the individual to stay with the current supplier.
There is also the issue of how easy it is to “shop around”. For those with access to the internet there is a proliferation of websites available to help but how can they know that these are independent or tied?
The next step is to make the selection process clearer.