What is an open market annuity?
When it comes to retirement time you will often find that your pension provider sends you a great deal of information about how to take the next steps to secure your retirement income. What many people don’t realise however is that at this stage you have the ability to shop around between annuity providers to find the company that is best suited to your retirement needs.
The open market option is a Government regulation which means that no pension provider is allowed to lock you into an annuity, rather you have the option to choose between a range of annuity companies to ensure that you get the best package at a competitive rate. Open market annuity options are usually only considered by about one third of all UK retirees, so currently many people are missing out on what could be an additional income of up to 30%.
Who is eligible for it?
Everyone in the UK is eligible for an open market annuity under legislation once they reach retirement age. Annuities are usually ‘lock in’ contracts, which means you have no option to change them once purchased, so ensuring that you purchase an annuity with the right company is extremely important and can have a big impact on your annuity income.
What benefits could I receive?
There are a number of benefits that you can receive from selecting an open market annuity and these include:
- Pricing – you are able to pick and choose between a range of annuity providers which means you can select the company which offers you the best price for their product
- Competition – annuity is big business and therefore many companies are working against each other to get your business, which in turn keeps rates competitve
- Package – you have the option to select between a wide range of packages, which can be tailored to suit your individual retirement needs
- Flexibility – the open market option allows you to choose between a range of annuity providers which means you do not have to worry about any potential problems with your current pension provider.