Although A-day seems to have encouraged more people to take advantage of the Open Market Option for annuities, more still needs to be done warns Just Retirement.
The firm says the latest sales figures from the Association of British Insurers (ABI) reveal more than 50% of pension funds took the OMO, suggesting people aer becoming more awrae of the better annuity deals available just by switching provider at retirement.
However the specialist life assurance firm says its own survey of 220 people, reveals 69% of people would still rely on their existing pension provider to decide what to do about their finances on retirement.
In addition the findings show 64% believe retirement will not significantly reduce their living expenses, while almost three-quarters of respondents, 74%, are still not aware they could be entitled to an increased pension through enhanced or impaired annuities if they are in ill health or have certain lifestyle conditions.
David Cooper, group marketing director of Just Retirement, warns while the ABI figures are to be welcomed, there is still some way to go in ensuring everyone gets the best possible income, as consumers who fail to “shop around”, could undo much of the effort made by advisers to select the right fund and pension scheme for a client.
He says: “With so much concentration on selecting the right fund managers to add value, allowing funds to rollover into an annuity with the holding provider could be equivalent to throwing away additional returns of 2.5% per annum over 10 years pre-retirement.”
nd he points out one of the main issues people have with annuities is the way the product is purchased as its “a one-off transaction, so if consumers are unaware of the OMO or the possibility of enhanced annuities the first time round, then there is no opportunity to learn through experience”.
Cooper continues: “This only serves to strengthen the need for the industry and regulators to work together to increase consumer awareness of all the options that are available to them.”
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Nyree Stewart on 020 7034 2681 or email [email protected]IFAonline
Spent 56 years at Schroders
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Hargreave Hale seeking legal advice