The percentage of people exercising their open market annuity option has fallen every quarter since ...
The percentage of people exercising their open market annuity option has fallen every quarter since September 2002.
This was the date at which the FSA made it compulsory for providers to publicise the open market option.
According to ABI figures, the percentage of people moving provider was 31.2% in the second quarter of 2003. This represents a fall from 31.6% in the first quarter of the year, 34.2% in the fourth quarter of 2002 and 38.2% in the third, the last period before the FSA introduced its regulations.
The ABI pointed out these figures are not fully representative of the number of people exercising the option, as they do not include those who look around for the best annuity at retirement and decide to stay with their original pension provider. Based on consumer research the insurance industry trade body conducted last August, around 10% of retirees had advisers search the market for the best annuity available and found their current provider to be the most suitable.
With providers only required to inform retirees of the open market option since last September, the ABI added the option has only effectively been in force since the beginning of this year.
As the initial notification of the choice of annuity provider has to come four months prior to retirement, the first raft of people made aware of it under the mandatory regime did not actually retire until the start of 2003. FSA regulations require providers to inform clients of the open market option four months before, six weeks before and on actual retirement.
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