ThinkIFA guide to the ‘Open Market Option’

What is the open market option?

Basically this is the term given for when you shop around and compare pension annuities.

If you are approaching your retirement then you will no doubt have been contacted by your pension provider informing you of the value of your pension fund (sometimes known as a ‘wake up letter‘).

Comparing pension annuities via the open market option

Find the best pension annuity rates by using the open market option to compare annuities.

You will have also received an annuity quote but what you may not realise is that you do not have to purchase your pension annuity from your current provider and you can shop around to compare annuity rates from all of the UK’s providers.

By utilising the ‘Open Market Option‘ (omo) and shopping around you could potentially increase your retirement income when compared to your default retirement income option offered by your current provider.

An independent financial adviser should be able to offer a no obligation open market option annuity comparison service to compare annuity quotes from every single provider in the UK to help find you the best quotes.

Click here to compare annuities

Should I use the open market option?

Absolutely yes! You spend most, if not all of your working life paying into a pension plan so it makes sense to maximise it’s full income potential.

Your pension annuity is one of the largest financial purchases you will ever make in your lifetime so it is important that you seek independent financial advice to ensure you choose the best option for your circumstances.

By working with an independent financial advisor, they should be able to offer friendly, professional, independent advice and use the open market option to compare the best pension annuities for your requirements.

After all, you only get the one chance so it is important that you choose wisely.

Can I just compare pension annuities online?

Compare annuities using the 'Open Market Option'

An independent financial adviser will use a ‘whole of the market’ comparison to find you the best possible pension annuity

Whilst many annuity ‘Marketing’ websites will claim that you can compare open market option annuities online and some will even show annuity rate tables, these tend to be very generalised rates, out of date and most of the time they are not entirely accurate.

When buying an annuity & exercising the open market option, you should compare ‘Personalised annuity quotes‘ that are specific to your circumstances which will take into account your specific requirements, medical history, current health and lifestyle.

If you smoke, are taking certain medications or suffer from ill health then you may be eligible for an impaired or enhanced annuity which could result in a higher retirement income.

By seeking fully independent financial advice, an adviser should be able to search every UK provider and accurately compare annuities which are suited specifically to your requirements / circumstances.

Why use the open market option?

Here are the main benefits of using the open market option to compare annuities:

  • An independent financial adviser can compare every single annuity available in the UK!
  • State of the art annuity comparison software enables many IFA’s to help find you the best annuity rates available.
  • Throughout the process, your adviser should be there to help you and offer friendly impartial advice should you have any questions.
  • An independent pension adviser can help with your application process should any problems occur.
  • If you purchase your annuity direct you may not be eligible for compensation should the annuity not have been the most suitable one. A regulated financial adviser is regulated by the FCA – financial conduct authority, who are the UKs financial regulator.
  • Most of the annuities arranged do not incur a direct charge to yourself (your ifa will receive payment from the provider but you can choose a fee based payment should you wish).

What are enhanced annuities?

An enhanced pension annuity is where you receive a higher level of income during your retirement than with a regular plan. This is due to your own personal circumstances, health & lifestyle.

For example, should you be suffering from any health conditions which may affect your life expectancy such as diabetes, obesity or if you smoke or have worked with asbestos, then you may be eligible for an enhanced pension annuity.

For an comprehensive report on the different types of pension annuities available please see our extended report on pension annuities and also our Open market option article.

What should I do now?

If you are coming up to retirement and are now looking to purchase a pension annuity, please complete our enquiry form below.