OMO – Open Market Option or Offering More Options
Categories: Pensions
Written By: Kevin
Latest statistics show that two thirds of people buying annuities, buy an annuity without fully using or exploring the Open Market Option (or OMO)*. Based on ABI figures, this means that 288,000** people have potentially missed out a better pension deal by not taking the Open Market Option, this is enough people to fill Wembley stadium more than 3 times!!!!!
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Also, whether or not the open market option was used, 93% of people bought an annuity***. This meant that this 93% immediately removed their ability to react to their changing circumstances and income needs throughout retirement.
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I believe that OMO should stand for Offering More Options. There is a great need for consumer awareness of all of the options which are available to them at retirement. Annuities are just one of several available retirement income provisions. Would your circumstances suit an alternative pension arrangement such as a drawdown plan, with-profits annuity, living time annuity, enhanced annuity, guaranteed retirement income plan to name but a few.
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For impartial truly independent financial advice give me a call today.
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* Source. ABI research paper No.8 2008.
** Source. ABI 2007 – 432,602 annuities purchased in 2007
*** Source. ABI 2007
August 14th, 2008 at 4:34 pm
Good blog Kevin.
I find it amazing that people approaching retirement don’t fully investigate all of the options available to them with their pension funds. Is it ignorance or indifference? Are pensions and annuities so difficult to understand or is it just that pension education and pension communication has been so poor?
If the average retirement pot is around £40,000, then a significant number of people will have substantially lower pots than this. And once they’ve taken their cash lump sum, there’s even less left to buy a retirement income, so, is it still worth shopping around with such small pension pots?
Of course it has to be.
No matter what is left, investigating the Open Market Option seems to me to be a ‘no-brainer’ and the media is full of articles and research about the ‘at retirement’ market.
If you’re approaching retirement, book an appointment and get advice from an IFA.
Mike Jones, Director, pension education website http://www.MyCompanyPension.co.uk