Pensions Income Choice Association chairman Tom McPhail has claimed pension regulators are “tired” of the Association of British Insurers downplaying the benefits of the open market option.
Speaking at the Money Marketing Retirement Summit in Dublin, McPhail said he had been “encouraged” by his recent conversations with the FSA, the Department for Work and Pensions and the Treasury over the Omo.
He said: “The ABI keeps pushing out research that says everyone knows about Omo and are choosing to make sub-optimal decisions, they are choosing not to buy the best annuity and they like the company so much they do not want the extra money. The system is fundamentally broken.”
McPhail cited statistics from the ABI revealing that two-thirds of people buy their annuity from the provider they saved their pension with and of these only 0.5 per cent take a non-standard annuity. Of those who buy their annuity elsewhere, 25 per cent opt for a non-standard deal.
He said: “The people who make the rules on this kind of thing are just about tired of listening to the ABI’s argument that the system is not broken and does not need fixing.”
ABI assistant director Dr Yvonne Braun says: “These comments miss the point. Our research shows that 96 per cent of retirees know that they have the right to switch providers and two-thirds actively shop around.
“There are many valid reasons why people do not switch providers. However, the ABI is not complacent and we are actively working with numerous bodies to ensure consumers are helped to buy the retirement product best suited to them.”