In an update on its review of the open market option, the Treasury says it will continue to monitor progress in the operation of the OMO.
Referring to the FSA’s OMO review earlier this year which found 30 per cent of annuitants were unaware of the option, the report states: “This suggests that firms must renew their efforts to ensure that those who are approaching annuitisation are aware of the OMO and sources of information to help them make an informed choice.”
But the Treasury acknowledged that the Association of British Insurers was working with member companies to promote best practice and improve their pre-retirement wake-up letters.
It said it would use a “basket of indicators” to measure whether people coming up to retirement understood the importance of buying the right annuity product and shopping around for the best rate and whether the process of switching providers in as quick and easy as possible.
Aegon Scottish Equitable head of pensions development Rachel Vahey says: “The pensions industry has made significant progress this year both in committing to raise awareness of the benefits of shopping around for the best annuity and in making pension transfers faster and simpler. We’re pleased the Government recognises this. There’s still more work to be done and we will continue to work with the Government, through the ABI, on this. We also recognise there is more to do to help customers understand their retirement options, such as whether they should make provision for a spouse or dependant or buy an increasing or level annuity. We are working closely with the ABI to develop a basket of indicators for the Government to measure progress of customers’ understanding to help them to make the right annuity choices”.