Trustees of occupational money-purchase schemes will be forced to offer members access to the open market for annuity purchase when the simplified pensions regime takes effect in April 2006.
Currently, many members lose out when trustees take annuities away from the pension provider, denying some scheme members access to improved rates from other providers because of lifestyle, health and other factors.
The new rules, set out in amendments to the Pensions Bill, require the trustees of contracted-in and contracted-out money-purchase schemes to give members the option of taking benefits with a different annuity provider.
The change is part of a drive to improve the performance of pension scheme trustees.
Standard Life senior technical manager John Lawson says: “Many trustees default to the current pension provider for their annuities but, in future, occupational money-purchase schemes must allow people to shop around.”
William Burrows Annuities director Billy Burrows says: “Trustees should be making sure scheme members are getting the best annuities to which they are entitled.”