So you’re about to retire and you think your days of working are almost up and then, your pension paperwork lands on your doorstep. Your presented with what only can be described as a Mensa test for you to get your money. There are more options to choose from than an Aircraft cockpit. So where do you start?
A term which you may or may not have heard of before keeps appearing on your documents, The Open Market Option. So what is this? Ok, imagine your bank manager knocks on your door and says, OK Mr Smith, you’ve been a loyal customer and all your savings are with us and since you’re about to retire we’ll give you an extra 2% on your savings. Now as personal and forthcoming as this may seem, your bank manager is the only one who knows you’re going to retire, as he has all your personal data. He’s going to make you an offer and no one else is. The bank manager knows that as you won’t be receiving any other offers he’s pretty much going to receive your gratitude and acceptance.
Now picture the same scenario again, this time he offers you the extra 2% bonus but then tells you that all the other banks and building societies will offer you a bonus also and you’re quite welcome to have a chat with them. Fantastic, your thinking but I quite liked that you came round here to my door and I didn’t have to do much.
Well this is where the open market option comes in. Your pension company will send you their offer of an income, but also offer you the chance to ask every other pension/annuity provider out there what they will offer. The easiest way to do this is by using an Independent Retirement Specialist. They will take your pension pot and do all the shopping around to find you the most income for your situation. Are you on medication or do you smoke? These factors can change the income you receive by up to 40%. Remember your pension company will not take these things into account when they first offer you an income.
Shop around and make sure you speak to a retirement specialist. Using a retirement specialist gives you the reassurance that you are using a registered professional who is regulated to give advice, not a call centre non-advised employee. A Financial Retirement Specialist’s advise is backed up by the FSA and the Financial Services Compensation Scheme.
