Have You Been Mis Sold an Annuity Policy?
A pension annuity is a financial product that offers retirees a guaranteed income from their retirement savings. In exchange for the transfer of his pension to the life insurer, the insured will receive a fixed income until his death.
Most peopla are now focused on talking to annuity owners, who may have lost potentially more significant retirement income, not comparing suppliers when they acquired annuity. The company is testing the water by taking 100 test cases from retirees who purchased without using the open market option (OMO) from the Financial Ombudsman Service (FOS).
MDs of the firm, appears in FT, saying that … “… even if a letter was sent with a message about her capabilities, she might not have been asked about her circumstances. Who bought the annuity, was stuck and not can be changed later, even if it is not the best for you. “
The issue of OMO is controversial in the annuity industry.
Groups such as the PICA (Pension Incomes Choice Association) have long argued that there should be a comprehensive reform of how annuities are sold in the UK. They advocate that an option on the open market (OMO) should become a default option, and promote the idea of a “retirement passport.”
Each retiree could then “buy” between armed providers the necessary information about their circumstances. On the other side of the coin, you have some (but not all) leading insurers that are represented by ABI. In the past, ABI claimed that there was a significant improvement in the information offered to potential beneficiaries.
However, there were severe problems, as the Financial Services Authority emphasized in 2008. They found that in 40% of cases, the information provided does not provide an adequate explanation of why OMO is essential for maximizing retirement income. Hargreaves Lans down, the most significant British annuity broker, said that they were faced with cases where the insured managed to increase his revenue by 60%. The ABIs themselves admit that only 10% of those who have the right to improve annuity receive them. They are intended for people who have health problems or who regularly smoke or drink. Since it is believed that their life expectancy is lower, insurers offer them more favorable rates. Nevertheless, even minor diseases can increase income, and in fact, there are more than 1,500 individual medical problems that can lead to an assessment of the best indicators.
Comparing annuity policies can have a significant impact on income during your retirement. Unfortunately, it was reported that many consumers are not looking and buy their departure from the same companies that manage their mis sold pension savings. The FSA has previously criticized retirement companies for failing to adequately represent open market options (OMO) in communicating with their customers.