OMO pensioners 50 times more likely to get enhanced annuity

Pensioners who take the open market option (OMO) are around 50 times as likely to benefit from an enhanced annuity as those sticking with their pension provider, ABI figures have revealed.

Tom McPhail, chairman of the Pension Income Choice Association (PICA), says the figures show there are clear advantages to encouraging people to take up the OMO.

ABI figures show just 0.5% of people buying an annuity from their existing provider took up an enhanced option, compared to 24% of those purchasing their annuity on the open market.

Further ABI statistics show the take-up of the OMO is actually falling, down to 34% in the third quarter of 2009, compared with 37.5% in the same period of 2008.

McPhail is urging the Government to take action to ensure more people are able to benefit from an uplift in their retirement income.

"We heard last week, in Mr Darling's PBR, that the Government's Open Market Option review group continues to ‘make progress'," he says.

"However, the ABI figures show the reality - that more needs to be done to ensure that those approaching retirement exercise their right to shop around for the best retirement income for their individual situation."