Tag Archives: Open Market Option

Annuity Advisers Will Always Err on the Side of Safety

For those interested in using their pension saving funds to invest in an annuity, the annuity market has several different options – both in terms of products as well as providers. An annuity once purchased cannot be reversed, so it is strongly recommended that you shop around and explore the open market before making a decision. There are a number of resources and tools available today to help people understand the annuity market. Many people also consult Annuity Advisers for guidance and advice.

Independent financial advisers and financial experts can offer impartial guidance and help you understand different options that may be available to you. They could help you understand your own financial needs, particularly future needs, and help you make the right decision that can serve you well over the long term.

In general, annuity advisors and independent financial advisors tend to err on the side of caution and suggest options that are safer rather than riskier alternatives. This is because of two main reasons.

The first reason is that annuity advisors and financial advisors have been trained to be cautious and to play it safe when it comes to their clients. After all, it is their job to help people make sound financial decisions that can pay off in the long term. It is not their job to help their clients take unnecessary risks and gamble their long term financial security on potentially unsafe investments.

The second reason is also related to this. The fact is that financial advice is a tricky area. The position of annuity advisors and independent financial advisors is one of great responsibility. Giving the wrong advice or advising a client to take an unnecessary risk without fully explaining the consequences is akin to professional suicide on the part of the advisor.

The fact is that they have to be cautious and this is because the wrong advice could result in them getting sued. If a client feels that they have received wrong advice from their annuity advisors or independent financial advisors, and have suffered damages as a result of this advice, they can in fact sue the individual advisor or their company.

In fact, the Financial Conduct Authority protects customers and could even offer compensation to the client through the Financial Services Compensation Scheme for the wrongdoings of annuity advisors and IFAs. The FSCS is a last port of call for customers of authorised financial services firms.

How to Find Out Your Annuity Fund

We are living for longer today than ever before. At the same time, the cost of living is ever rising. Changing social and economic factors mean that planning your finances during retirement has become more important than ever before. After all, retirement is known as the golden period, when one should be able to enjoy the fruits of life’s labour. It is therefore vital to plan carefully and optimise your financial assets to provide for you when you stop working. Things like annuity value prove to be immensely significant during retirement, as an annuity is one of the most important, and often the only source of income for pensioners.

An annuity provides a regular and steady income in exchange for a lump sum. People usually invest their pension savings into an annuity scheme, which then pays out an income either for as long as you live, or for a pre-agreed period of time. How much income an annuity can offer you, or annuity value, depends on the size of your Annuity Fund, which is the amount invested in the annuity, as well as various other factors.

The most important factors that determines annuity value is the type of annuity you choose to invest in and the current annuity rates. Other factors include age, gender, and location. Depending on your health and lifestyle, you could also be eligible for an enhanced annuity, which has a higher annuity value based on the shorter than average life expectancy of the applicant.

Often an annuity is the only source of income during retirement, and so choosing the right annuity with sufficient annuity value is extremely important. Once you buy an annuity it cannot be changed or cancelled – so it is important to make the correct decision the first time around. An annuity offers a chance to make the most of your life savings, but choosing an annuity that underperforms or does not suit your needs could mean losing your life savings to an ineffective investment.

It is imperative to shop around and use the open market option to find the most suitable annuity with a sufficient annuity value. You can consult an independent financial advisor with expertise in the retirement sector to understand the implications of investing in different types of annuities and choosing the best option. You can also use online tools like annuity calculators etc. to find out the best annuity value you could get in exchange for your annuity fund.

What Options can I choose on my Annuity?

On reaching the minimum age of 55 years of age you may start to consider your options for establishing an income to last throughout your retirement. Usually your pension provider will send you out a wake up pack as your planned retirement date approaches. This pack will usually include a basic quote for you to take an annuity with them.

It is very important to establish the best rate that could be available to you by using your Open Market Option.

The Open Market Option (OMO) is your right to take your pension fund to another provider to purchase an annuity or alternative retirement income. As the difference between the best and worst annuity rates can be considerable, it is worthwhile taking the time to find the best possible income for your given requirements.

If you have pension funds from a number of different pension schemes it is usually beneficial to take a view of the whole pot of savings as better annuity rates can sometimes be achieved for higher fund values.  Where a number of arrangements are to be used it is normal for the funds to all be transferred to the annuity provider to purchase the annuity under an Immediate Vesting Pension. This means that all funds are transferred over with the tax free cash being paid by the new provider, rather than the ceding scheme.

The rate applicable will be determined by the age, health and up to December 2012 your sex. From December 2012 to new EU Directive means that no differential in cost can be applied due to the applicant’s sex. Higher annuities are available for those that smoke and also health and lifestyle factors.

Other factors affecting the rate of your annuity will be the options that you choose such as escalating income, guarantees and spouse’s benefits. Generally speaking if you took a basic annuity with level income, no guarantee and no spouse’s benefit your income would be considerably higher than someone who chose to take an annuity increasing with RPI with a 10 year guarantee and 100% spouse’s benefit payable on death.

Annuity Rules Are The Biggest Misconception

An annuity is an important tool in the retirement sector, which allows you to draw your pension fund as regular income during retirement. Investing your hard earned life savings into an annuity is a very important decision indeed, and it is vital to shop around not only for the most suitable annuity type, but also for the most suitable annuity provider for you.

The biggest misconception when it comes to annuities is that one is required to set up an annuity with their pension provider. The truth is that thanks to the open market option, there is absolutely no need to be limited to your pension provider for an annuity. In fact, the Government is trying to encourage people to use the open market option and shop around for the best annuity deal before investing.

Annuity rates can vary very widely between providers. Also, the variety of annuity products available means that different annuities will have different rates even from a single provider. So a company that offers the best rates with one type of annuity may not necessarily do so with a different type of annuity.

The first step towards finding the right annuity, therefore, is to understand your own needs and find out what type of annuity works best for you. For instance, would you need a single life annuity, or a joint annuity? Would you rather have a guaranteed income for life, or invest in a higher risk investment linked annuity? Would you need a fixed annuity with fixed payments for life, or an escalating annuity? These are some of the questions that need to be answered before you can shop around for the best annuity quote.

Your pension provider is bound to offer a quote, and there is no reason why you should not consider this quote, as there is every possibility that it will not only be competitive but may even be better than the open market options. The point is not to limit your options, but to shop around and make an informed choice about this important step in life.

The Financial Services Authority has worked hard to ensure that pensioners have the right to exercise an open market option and shop around for annuity quotes. The FSA continues to encourage people to use this option and has also made it mandatory for your pension provider to remind you of this option while offering a quote. That you must purchase an annuity from your pension provider is a myth, but thankfully, one that is continuing to diminish rapidly.

Which Annuity Is Best?

The main goal of any person who has retired is to usually convert the savings that they have built up towards their retirement into a regular source of cash, so that they may continue having an income. A lifetime annuity is what will usually determine the amount that you are paid, and since you will be paid until you die, it is best that you take the time to find a provider offering the best quote.

There are people who will usually take the first quote that they get although it may not be the best. So, how do you find out which annuity is best and what is the best way in actually obtaining it?

To start with, it is important that people realize that they do not need to purchase their annuity from the same firm that also holds their pension funds. A person can shop around and they may get lucky by getting a better offer from another firm for their annuity.

The Open Market Option offers people a chance shop around and get the best annuity quotes and if you are looking for the best quote, then this is essential in order to obtain the best deal and therefore best income from the pension pot available.

There are a number of annuities that you can choose from, but the most popular are lifetime, unit linked, with profit and enhanced annuities. However, the choice that you make for your annuity will usually be based on your sex, age, health and even marital status.

However, your preference will also contribute to deciding which annuity to choose. It is also important that the rates that you will be paid are determined beforehand so that you may make an even better choice. For instance, people with a serious medical condition can go for the enhanced annuity, since these schemes offer a greater annuity based on the fact people who qualify may not live for as long as a healthy person.

Therefore, there are many annuities that are offered in the market today, and it is up to a person to make the choice on what they want to get. But it is advised that annuity experts are consulted so that a person can be able to make a choice based on informed knowledge. This is important since once you make your choice, you will be stuck with it for the rest of your lifetime.

Calculate your Annuity Quote Online!

Despite having the open market option, even today, many people continue to opt for the first annuity offer that is made to them by their pension provider. Market research shows that just by exploring the market and shopping around, you could be getting up to 46% more income from your annuity. So how do you find out how much you could get from an annuity scheme? Thanks to the leaps and bounds made in technology today, you can find out information about different types of annuity, as well as get instant annuity quotes right from the comfort of your home.

There are many websites that offer free and objective advice about different kinds of retirement investment products, including different types of annuities. You can read about how they work and understand how different annuities would work for you. You can also explore information provided by different annuities companies on their websites about their products and how they work.

Using all this information, you can decide what kind of annuity might work best for you. Of course, you will need actual Annuity Quotes to make the final decision, and until just a few years ago, this would have meant having to visit each company or at least make phone calls to different annuity providers for their quotes. Today, of course, you need to do no such thing. You can get annuity quotes instantly from different annuity providers simply by entering the required information in the online form.

Using the information you provide, usually about your gender, location, age, amount of investment, and other information like health and lifestyle data, the annuity company can calculate how much they could afford to pay you. If you want to find out the maximum income you could get from an annuity, you can use online annuity calculators, which are quick, easy and convenient.

Most companies as well as independent websites offer annuity quotes for free. Online pension calculators and other tools are also usually free, as is the information and other resources available on the websites. If you need help understanding a product or assistance with how to make the choice, an independent financial advisor could give you objective and impartial advice. IFAs generally charge a fee which can be either an upfront one off payment, or a commission based fee which is paid after you have made a decision. So, making the right choice of annuity has never been easier and more convenient.