'Wake-Up' To The Open Market Option
The signs are that the
FSA is preparing to take a tougher stance in ensuring the promotion of the Open Market Option (OMO). According to the regulator's latest release of findings, released in July, on the progress of the use of OMO, nearly
40% of 'wake-up' material issued by pension providers to customers prior to retirement fails to meet FSA guidelines in clearly setting out the benefits of the OMO. We
wholeheartedly support the FSA and efforts of other opinion formers to raise awareness and usage of the OMO.
In addition, the FSA also highlighted the need for some significant improvement in the delays in transferring funds so that customers can gain access to their annuity income as quickly as possible after using the OMO.
Just Retirement is passionate about helping IFAs to treat customers fairly and estimate that retirees are currently missing out on £500 million per annum by not using the OMO. IFAs can play a crucial part in addressing this situation through the provision of professional retirement advice.
Additionally, coverage of the OMO is building in the media including a major Financial Mail Campaign calling for all retiring customers to have clear, fair and unambiguous treatment when they consider their retirement options.
Helping clients gain the retirement income that is rightfully theirs
Using the OMO, coupled with an understanding of a client’s health is truly treating customers fairly and helping clients through the ‘wake-up’ process (which usually starts with a letter from their pension company six months in advance of their normal retirement date) is vital in ensuring that clients get the best annuity deal.
As a reminder, the essential questions to be asking prior to advising a client on their options include:
- Do they currently, or in the past, have any health or lifestyle conditions, which could qualify them for an enhancement to their annuity income?
- Do they want to ensure their partner receives an income after they die?
- Are the concened about their income being eroded over time by inflation?
- Is there a minimum period required for the annuity to pay out for?
- Does the client’s individual financial circumstances make an annuity immediately appropriate?