SAGA — Doing things properly

Many people, who have been saving into a pension fund through an insurance company, will arrange an annuity through the same insurance company that has been providing the pension scheme. However, that insurance company may not currently offer the best annuity rates, or it may not have the options most suited to your requirements. Therefore it is important to shop around until you find the best rates for your circumstances. This is known as the ‘Open Market Option’.

What does it mean?

It means that you can choose the best annuity provider for you. It is extremely important to realise that, once your pension fund has been paid over to the insurance company providing the annuity, you will no longer have access to the capital sum and you will not be able to reclaim it. This is why it is vital to make the right choice as to which insurance company to use and which type of annuity to purchase as it is a ‘once only’ decision. You cannot subsequently change your mind and move your pension fund capital to another annuity provider.