Treasury issues OMO ultimatum to insurers

The coalition government has issued an ultimatum to the Association of British Insurers over its opposition to the open market option, RP understands.

A well placed source claimed government officials had told the ABI – whose membership includes a large number of annuity providers – to provide “compelling evidence” as to why the OMO shouldn’t become the default option for savers.

Hargreaves Lansdown's Tom McPhail, chairman of the Pension Income Choice Association, said the Treasury had been “very receptive” to the organisation’s ideas on the OMO.

He said: “Clearly nothing’s set in stone, but the tone of the communication I’ve heard from within the ABI suggests that all the relevant ministers and the Treasury officials have bought our argument that we should make the OMO the default.”

McPhail added he expects the ABI to attempt to “pursue the status quo” if at all possible.

An ABI spokesman said: “The ABI and its members are committed to making the process of shopping around for an annuity as straightforward as possible.

“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.”