AWD Chase de Vere, the Independent Financial Advisers, has called for a revamp on the use of the Open Market Option for company pension scheme members. The Company claims that more than 77% of Defined Contribution (DC) pension members may not be receiving the level of income in retirement to which they are entitled.
AWD Chase de Vere says that only 23% of group pension scheme members use the Open Market Option and so they are likely to miss out on the best annuity rates.
To compound the problem, most group pension members also miss out on the option of Enhanced Annuities. AWD Chase de Vere finds that 45% of their annuity clients are entitled to an Enhanced Annuity for a wide range of conditions including smoking, high blood pressure, high cholesterol and diabetes.
Patrick Connolly, Head of Communications, AWD Chase de Vere, said:
“The current system gives very poor value for group pension scheme members. They can miss out on both the best annuity rates and the option of enhanced annuities. Enhanced annuities can increase a client’s income by more than 40%.
“At a time when there is so much focus on employees saving for retirement with the launch of the National Employment Savings Trust (NEST) from 2012, it is ludicrous that so little help is provided to people when it comes to getting the best value from their hard-earned pension savings.
“We would like to see more employers offering financial advice in the workplace for those taking pension benefits and a reworking of annuity quotes to provide a clear comparison on enhanced and standard annuity rates from a wider range of product providers.”