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Double-digit gap in top-five annuities

Research from Better Retirement Group reveals double-digit price differentials between the first and fifth best annuity provider following news of a single-tie deal between Openwork and Partnership which commits the provider to top-five rates.

Last month, Partnership confirmed a single-tie deal with Openwork to provide both standard and enhanced annuities to the network offering top-five annuity rates.

Analysis from Better Retirement Group shows the difference between the best conventional rate and the fifth-best on a £50,000 pension pot is currently 12 per cent. The split between the highest enhanced annuity quote and the fifth highest is also 12 per cent.

Better Retirement Group director Billy Burrows (pictured) says: “The top-five quote guarantee is meaningless. The difference between the best annuity rate and the fifth-best is 12 per cent at today’s prices. This type of deal just feels wrong. The industry is working its socks off to encourage people to shop around for the best rate.”

Aviva head of retirement Darren Dicks says: “There are only three active providers in the conventional annuity market and four or five in the enhanced market.”

Openwork proposition and marketing director Philip Martin says: “Our challenge is to ensure customers with smaller pots can be economically serviced after the RDR. It is not clear to us how an adviser can undertake a full Omo exercise with an appropriate charge for a client with a small pension fund.”

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Re charge for full advice on small annuities post RDR. I couldnt agree more. Our costs are going up & up and it takes longer than ever to justify the advice around what type of annuity you have recommended. It is getting evermore expensive to comply and yet to carry on in business we will have to charge more, just to stand still never mind develop. Who is going to have to pay? The client. Yet more detriment to the consumer brought directly from The FSA. Good one lads. Keep up your sterling work. You’re playin’ a blinder.

  2. Roger Pangbourne 8th June 2012 at 2:06 pm

    Surely someone should do something to stop restricted deals happening in the OMO world.

    Billy is 100% correct that OMO is all about shopping around for the best rate and it is very non-TCF to offer restricted panels.

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