Currently, the major annuity companies are engaged in a major marketing effort to put together the next generation of such arrangements.
The defence of something being better than nothing and that they will not be permanent is still preferred. These are more sophisticated, standard life providers offering to take business where they have been most competitive alongside an impaired or enhanced offering.
In promoting the deals
This is outrageously patronising. Small increases matter to the pensioners who retire with small pension pots. People saying this should pay some attention to the size in pounds and pence of increases in state benefits and if they are so confident, why not agree to displaying the Omo top rate next to theirs?
The likely effect of the deals
There is already evidence that the net effect of these arrangements has been to reduce consumer value. Any extension of them and particularly the involvement of all the major Omo players will almost inevitably further reduce consumer value.
What we need is today’s solutions for the retirees of both today and tomorrow.
The Omo can be the default option. The Omo should be provided to all at vesting. This requires all interested parties, including HM Revenue and Customs, to complete the task of enabling the Omo annuity process to be undertaken through technology. This will ensure that the only human intervention is enabling the most appropriate annuity to be purchases.
The reduction in costs for those providing the Omo service, the pension companies and the annuity providers should enable not only a competitive and profitable reward to all participants but improved consumer value across the marketplace.
Stuart Bayliss is a director at Annuity Direct