DWP and Treasury work to boost pension income

30 June 2010 12:00 pm | By Helen Pow

Treasury officials and civil servants in the Department for Work and Pensions are working together in a bid to ensure that people get better value for money when converting their pension pot into an income.

Speaking at a briefing in Westminster last week, pensions minister Steve Webb admitted the current system makes it difficult for people to secure the best deal.

He said: “On giving people value for money when they save, the system of when people turn their pension pot into a pension is not working well enough.

“Obviously, the Treasury lead on annuity policy but I know that officials in the two departments have already been working jointly on making the conversion of a pension pot into a pension or whatever much more value for money.”

The take-up of the open market option has been stuck at around 35 to 40 per cent for almost a decade. The Pension Income Choice Association has been lobbying the Government to boost take-up by making Omo the default option.

It recently called for retirement wake-up packs to be changed so that clients could no longer buy an annuity from their existing pension provider simply by putting their signature on the quotation.

Chairman and Hargreaves Lansdown head of pensions research Tom McPhail says: “It turns out that the Government has been listening. Webb went out of his way to tell us they were working on this and I am very encouraged by his comments. I am optimistic that we are going to see some significant changes in how the shopping-around process at retirement is handled.”

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