The ABI (Association of British Insurers) is set to launch a new industry-wide electronic information exchange in December which should help cut OMO payment times to an initial 30 days.
Options (Open Market Pensions Transfer Service) is the industry's reponse to the damning FSA Review of the OMO in July. It found delays in open market option annuities payments in 60% of the 283 cases reviewed and called on providers to show they were taking action to cut delays by its December TCF deadline.
The new system has been developed by Origo, the financial services e-commerce body, with input from 13 providers representing over 90% of the annuities industry.
Its aim is to reduce the time it takes providers to transfer information and funds between them required to set up an annuity. In some cases, the time taken has been as high as 20 weeks and the issue has been of huge concern to IFAs and their clients.
The initial target is within 30 calendar days from the point the provider receives the application to when the annuity is set-up, although hopefully this target will be reduced over time, the ABI says.
To start with, the focus for the service will be on transfers from individual personal pensions, group personal pensions, stakeholder pensions and free-standing AVCs. The scope will then be widened in 2009 to support additional products, and also pension-to-pension transfers.
The ABI will publish quarterly updates of the performance achieved in terms of the transfer process.
Providers involved will be testing the service in October and November and, subject to the results of the tests, Options will go live in December 2008.
The ABI has consulted the FSA and the Treasury on the initiative, and is working with HMRC and the DWP to address causes of transfer delays that are beyond providers’ control.
Companies participating in the Options initiative are: AEGON, AXA, Canada Life, Friends Provident, Just Retirement, Legal & General, MetLife, Norwich Union, Partnership, Prudential, Pearl Group (including Resolution), Scottish Widows, Skandia, Standard Life and Zurich. Other companies are expected to join the scheme in due course.
Maggie Craig, the ABI’s director of Life and Savings, says: “This initiative marks a step change in the industry’s work to improve customer service around the Open Market Option. The ABI and the annuity providers involved are determined to make the annuity set-up process work better, and this service will reduce the time taken to transfer between providers.
“The ABI has already published new template wording for ‘wake up’ letters sent to people who are approaching retirement. This will help make the options customers have at retirement clear and easy to understand. The Open Market Option is prominently featured and explained, alongside all the different types of annuities that are available.
“Together, these initiatives support the work providers are doing to improve set-up times and ensure that people have the information they need to make an informed decision at retirement.”
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