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Pica: OMO changes could generate extra £7bn

Changes to the way pension customers shop around could help pensioners generate between £3.3bn and £7bn of extra income over the next 20 years, according to the Pension Income Choice Association.

In its submission to John McFall’s Workplace Retirement Income Commission, Pica says reforms could be in place within one year if industry and Government get behind the process.

In its submission, Pica says the provision of a default annuity option should be removed from pre-retirement communications and replaced with a  “pension passport” document to help consumers shop around.

It adds the pension passport must be based on simplicity, be intended to prompt the recipient to take action on their own or with professional advice and state if a consumer is eligible for a guaranteed annuity rate.

Pica chairman Tom McPhail (pictured) says: “The commission has acknowledged the huge shift in workplace pension provision from DB to DC. Our submission highlights that the industry now has a far bigger responsibility for helping retirees shop around for income.”

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