The Prudential have gone against the industry regulator, the Financial Services Authority (FSA) regarding their stance on buying your pension at retirement. The FSA has now made it part of the regulations that customers approaching retirement must be given the opportunity to shop around for their pension income.
For example, if you had been paying into a personal pension with a pension company, at retirement they might offer you a pension of £500 per month. If you took your pension pot to another pension company, they might offer more or less each month. By shopping around, you have the best chance of receiving the highest possible pension in retirement.
According to recent press coverage, Prudential does not agree and believes that those people not taking advantage of the Open Market Option are still getting good value. Prudential's figures apparently showed that 70% of people not using the Open Market Option facility were with the six most competitive annuity providers. They are also said to believe that the difference in rates offered is rarely more than 2 or 3%.
Our View
Whilst Prudential's figures may be correct, they still only represent 70% of the retiring public - what about the other 30% that will have been offered poor value annuities? We believe that every person approaching retirement should check out the Open Market Option facility. Some people will be able to achieve a far higher pension in retirement because of their health or even their postcode.
Once you make your choice to retire and the provider you take your pension from, that's it - for the rest of your life. We believe everyone should shop around for the best deal or risk being worse off for the rest of your life.
Learn more about At Retirement - Your Options in the Pensions Adviser.com.
Free Fact Sheet For Registered Users - At Retirement - Your Options.
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