Omo? More like slow-mo
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The news follows a recent campaign by Living Time to rebrand the open market option to stand for "offer more options" in order to make clients fully aware of their right to shop around for an annuity or another retirement solution.
But as delays processing pension transfers occur in 60 per cent of cases, according to the FSA, Omo could soon become known as slow-mo unless the industry and regulator addresses the issue as a matter of urgency.
Virgin¹s calculations are just an example, and of course the sums involved would change dramatically depending on how big the pension fund is, how long the delays and how annuity rates move, but they do give an indication of the life long effect these delays can have on clients.
Yet it is heartening to know that not everyone will be scrabbling around to make ends meet in retirement.
The latest TUC annual PensionsWatch survey reveals that the directors of Britain's top companies are far from seeing their pension contributions credit crunched. Of the 346 directors surveyed, the TUC found the average pension pot was around £3m each giving them a retirement income of £200,000 a year.
Directors also escaped the trend towards riskier defined contribution schemes with three-quarters managing to cling on to a defined benefit policy.
In contrast there was more grim reading from the Association of Consulting Actuaries this week over the future landscape of occupational pensions.
Personal accounts may lead to widespread leveling down of existing pension provision, Aca's survey of small firms has shown.
More than half of current smaller employer schemes would stand to fail the exemption test for personal accounts and a third of firms expect to reduce their pension scheme benefits in order to meet the cost of higher membership or to close their schemes in favour of personal accounts.
Conservative shadow pensions minister Nigel Waterson argues there is a "very real risk of leveling down".
He says: "We have been warning for some time that many employers may close existing more generous schemes, and that a high proportion of lower-paid workers will opt out of the new system. Ministers need to address these and other issues, and soon."
On the upside at least it may be a sign that the Conservatives are starting to become more vocal about personal accounts. Who knows, perhaps the next step might be to come up with some viable solutions to patch up some of the holes in Labour's policy rather than looking for more loose threads to pick at?
In other news Prudential at least seems to have reason to be cheerful. It signed a £1bn bulk annuity deal with Cable & Wireless this week, which it says is the largest contract of this kind to be signed this year. Transferring investment and actuarial risks away from scheme members to an insurer in this way would seem to make good sense for employers and is good business for life offices.
Rumours are also circulating that entrepreneur Clive Cowdery is back on the acquisition trail again with designs for Friends Provident.
But would the insurer risk getting its fingers burnt again after last year's Resolution debacle?
