Consumers to blame for poor OMO take-up

Consumers and not pension providers are to blame for the lack of take-up of the Open Market Option (OMO), claims The Annuity Bureau.

Its comments come in response to Treasury demands for ABI members to explain the low uptake of the OMO by consumers.

"Treasury secretary, Mark Hoban, clearly has the pension companies in his sights but the truth is they are often not at fault," says Gemma Goodman of the Annuity Bureau.

"It must be remembered that consumer apathy and fear of making financial decisions in areas that are new to people, are by far the biggest reasons for the lack of OMOs in the UK.

"Compulsory OMOs will cure this and the Annuity Bureau is ready to work alongside the product providers to help them to maximise every members' retirement income."

The Treasury says it welcomes improvements the industry has made to the OMO but more work could be done. 

It says: "We are currently consulting on ending the requirement to annuitise at age 75 and the consequent changes to the annuities market. Changes to the open market will be considered alongside other policy responses as part of this."

ABI figures show 96% of consumers are aware of OMO but only 67% shop around.

A spokesperson for the ABI says: "We continue to work with members, government and other organisations to help consumers understand the decisions they need to make at retirement about their pension savings, and to improve the customer experience when making those decisions."