About Annuities

The importance of the Open Market Option

The OMO was first introduced in 1978 to help retirees get more choice at the point of retirement by giving them a legal right to shop around for the best deal in the annuity marketplace. Now they have even more choice at retirement than just a lifetime annuity.

However, 30 years on and it would seem that many clients remain unaware of their OMO rights. Recent ABI research suggests that as many as 2/3rds of people fail to fully utilise their OMO. Although not all retirees are getting a bad deal as a result, for a significant number this failure to exercise this important option could cost them dearly.

There can be many reasons why someone may not use their OMO. In some cases, people are simply unaware that the option exists. It may be that they have simply not read their pension maturity papers correctly or their provider has not clearly signposted the option in the so-called ‘Wake Up’ letters they must send to pension clients as they approach their Selected Retirement Date. Other clients may not be getting independent advice on the full range of options available.

Many industry specialists believe it is time for things to change and are calling on everyone involved in shaping legislation and regulation in this area to modernise the retirement income industry.