"The decision to buy an annuity is one of the biggest financial decisions clients will take but few shop around for the best annuity rate for their circumstances."
Unfortunately, these words remain as true today as back in 2001 when originally penned by the Financial Services Authority.
At that time only a third of retirees buying a lifetime annuity exercised their open market option (OMO), prompting the FSA to require insurers to explain more clearly the benefits of shopping around and taking professional advice. By 2006 take-up of the OMO had actually fallen, but another series of high profile initiatives saw it rise to nearer 40%, before falling back again last year to 37%.
Since 2001, around 2.5 million annuity contracts have been sold. With the difference in the best and worst annuity rates estimated at around 20%, how many billions of pounds income has been foregone? How many more pensioners will accept a lower income before a truly effective solution is implemented?
Living Time has called on the top 200 adviser firms in the UK to lend their weight to the OMO - Offer More Options campaign, a 'campaign for change' that has two primary aims:
First, to encourage retirees to consider all their options at this crucial stage of their lives; and second, to help advisers to position themselves to grasp the opportunities in this growing market by offering a real choice of retirement solutions not just at retirement but through retirement.
Joining forces through a formal Offer More Options campaign group has the potential to deliver real improvements to what is currently a poorly functioning market. We are urging advisers and providers who recognise the problems and are passionate about finding solutions to come on board.
It is only by working together that we will make a real, positive difference both to our own businesses and the lives of our retiring clients.
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