The Government has entered into detailed discussions with pensions industry representatives over making the open market option the default for investors.
Representatives from the Treasury and the Department for Work and Pensions met with the Pension Income Choice Association and the ABI earlier this week to explore the practicalities of legislative change.
Pica chairman and Hargreaves Lansdown head of pensions research Tom McPhail (pictured) says: “The Government are looking to go beyond improving the system we already have by looking at the practical implications of making shopping around the default.
“I think policymakers are receptive to the idea of making the Omo the default but they want to be reassured that if we do go down that road it will work. So we’re discussing the detailed specific practicalities of things like how we communicate with people, what do we do if they don’t respond and whether we need to look again a small pots.”
The ABI published a best practice guide in January following a warning from Government in December that it would “consider legislative options” if insurers failed to improve take-up of the Omo.
In November, the Government and the Pensions Regulator issued a joint statement outlining concerns about the quality of member communication. This followed a warning from the ABI in September that Government ministers had cranked up the pressure on providers over the issue.