When you are nearing retirement, your pension provider may send you a quotation regarding your pension scheme.
If you are not automatically sent a pension quotation, you should ask your pension provider to send you one.
A pension quotation will typically include the following information:
- The value of your pension scheme and which investment funds the scheme is linked to, if relevant
- The value of the annuity income your pension company will pay to you
- The features and benefits of the pension annuity
- The value of any pension commencement lump sum
Why should I ask for my pension quotation?
Getting a full quotation from your provider is a way of arming yourself with knowledge about your pension plan or pension plans. You therefore know the facts regarding your pension scheme, its value, and how the fund will be paid to you. Once you have this information, you can use it as a base for comparison with other pension annuities.
After conducting research regarding your annuity, you may decide that you wish to take your annuity to the open market and try to find a more competitive pension provider to handle your annuity.
Choosing the Open Market Option
The annuity offered by your pension company may not be the most competitive scheme and choosing the open market option could increase the value of retirement income. The open market option is a legal right to buy a pension annuity from any provider on the market.
This can apply to both a standard annuity and a with-profits annuity. Choosing the right pension annuity is extremely important, because once purchased, annuities cannot be switched to another annuity provider, changed to a different type of annuity, or altered in any other way.
How much could the OMO (open market option) increase my annuity by?
The OMO could provide a substantial increase in annuity payments.
Taking the OMO could increase income by 10 per cent, whilst upgrading your annuity to an enhanced annuity or impaired annuity could significantly increase retirement income. The better the annuity rate, the more money the retiree will receive for the rest of their life.