02 November 2010
The Pensions Regulator (TPR) has today published an updated
leaflet 'Making your
retirement choices', which is available on their
website to assist members in making good decisions about their
retirement income.
The regulator believes that trustees and pension providers can
do more to encourage members to shop around for the best annuity
deal.
It is currently a legal requirement for members to be offered the
open market option (OMO). However, the regulator's research shows
that the documentation issued can cause confusion, even when the
literature is technically compliant with legal requirements, which
may detract people from looking externally.
Despite 98% of literature reviewed by the regulator including
information on the OMO, only 23% of members exercised their right
to shop around to get the best deal.
It is believed that by exercising the OMO it could increase a
person's pension annuity by 17%. Members may also find they are
eligible for an enhanced annuity if they have a health condition.
This could boost income by 33% or more.
Pensions Minister Steve Webb said:
"The choices we make at retirement are amongst the most important
of our lives.
"You don't have to buy an annuity from your pension scheme
provider. Shopping around can provide better value for money and
significantly boost retirement income.
"I want to see trustees and providers really encourage members to
make good choices."
Bill Galvin, The Pensions Regulator's acting chief executive, said
trustees and providers have an important role to play in enabling
better member decision-making:
"Members could miss out on a higher retirement income because they
are not well-supported in making good choices.
"Our research shows that standards of information are mixed.
Retirement literature should grab members' attention, and motivate
them to take action, rather than putting people off with jargon or
legalese.
"Whilst the legislative requirements provide an important
safeguard, we want to see trustees and providers delivering simple,
readable information that helps members to maximise their
retirement income."
The Pensions Advisory Service have setup an annuity
planner to assist people find the best annuity for them.
If you wish to discuss your annuity choices with one of our
experts, you should contact the helpline on 0845 601 2923.
