The Daily Mail was at it again this week – spreading doom & gloom about the pensions industry and putting fear into the hearts of people who have been sensible enough to save into a pension over the working lives.
The Association of British Insurers (ABI) recently introduced new guidelines intended to ensure that anybody thinking of taking their personal pension benefits was made aware that they could take their pension with any provider in the market - not necessarily their current provider. This is called the Open Market Option or OMO.
As part of these changes, the ABI, who are effectively the trade association of insurance companies, launched an on-line ‘comparison tool’ to show rates offered by their members and based on a number of basic assumptions. Other organisations, including a leading high street supermarket, have jumped on the band wagon and have launched or will be launching their own calculators.
According to the Pension Income Choice Association (PICA), only around 40% to 50% of retiring investors shop around for the best annuity deal, thus potentially giving up thousands of pounds of income over their retirement.
One weakness of these comparison sites is that the best annuity rate doesn’t necessarily mean it’s the best option for an individual – that’s far too simple!
An annuity might not even be the right product!
The problem with these ‘do it yourself’ on-line comparison tools is that they assume that an annuity is the best thing for everybody and take no account whatsoever of individual circumstances or other solutions available.
How on earth can you go shopping when you don't know what you're looking for?
If you are thinking about taking your pension benefits in the coming months come and talk to us because we can help you decide on the most appropriate way to take your pension and we will find the best rates available across the whole of the market – give us a call and see what we can do for you.