Open market option
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This is possibly one of the most important things you need to know about
purchasing an annuity. You will generally have your pension policy with a life
insurance company. The open market option refers to the fact that you do NOT
need to purchase your annuity from the same company as you have your Personal
Pension/AVC with. It is quite possible for you to shop around all the
insurers in the market and find the best deal.
Many insurers did not advertise this fact historically and many people do not
shop around to get the best deal. In the future insurers will need to make a
statement on your pension quotation to the effect that you have an open market
option.
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Why is it so important to shop around?
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Annuity rates are not the same from every insurance company. In fact annuity
rates can vary considerably from one company to another. The difference between
getting the best annuity on the market and the worse annuity on the market can
be significant, i.e. over 10% at least and possibly more. Remember once you have
purchased an annuity, thats it. You can not 'take it back', it is a one way
final deal. You are locked into the deal forever so you MUST get it right.
We strongly suggest you obtain independent financial advice to find the best
deal on the market with the options you want.
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Read the guide to
investment in the pensions guide. It explains what you need to
think about before investing for your retirement.
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Use our online calculator
to get an estimate of your basic state pension.
Its free and
simple to use you can even include it on your own website!
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Tell a friend about
Essential Pensions. Send an automatic message to your friends
email account about the site.
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If you have a pensions
related question then please let us
know.
If it's something other people
would find useful then we will post an answer in our Frequently Asked Question
(FAQ) area.
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