Lowe expects providers to create annuity shopping services

Banks and providers will create services to help customers shop around for annuities if reforms to the open market option (OMO) succeed, Steve Lowe, director of external affairs at Just Retirement says.

Those services will compete directly with IFAs for at-retirement business, Lowe warned, forcing intermediaries to prove the value of advice over information.

Lowe says reform of the OMO to create "default shopping around" for annuities could be in place by 2013.

Pension providers are obliged to inform investors they can buy an annuity from rival insurers.

In September, the Association of British Insurers (ABI) said it will forbid its members from including application forms for their own annuities in at-retirement information packs.

Lowe said if plans succeed to force retirees to shop around before they annuitise, providers will create services that take a cut of the pension pot in exchange for annuity comparison.

"Advisers will have to demonstrate their value against this kind of competition," he said.

Lowe, who sits on the board of the Pension Income Choice Association (PICA), said a change that forces retirees to shop around before they get a pension is almost certain and expects an OMO announcement in next April's budget.