TRUSTEE ANNUITY PURCHASE

Responsibility for ensuring a best annuity outcome was confirmed back in the Pensions Act 1995. Since then many Trustees have simply relied upon their advisers and administrators to recommend and transact the purchase of the annuity. In turn, advisers and administrators have been happy that they were carrying out their duties satisfactorily without the necessity to go through the full Open Market Option (OMO) or an advice scenario to the member.

Pension fund advisers and administrators have over the last couple of years been looking into whether the current services were good enough in the light of the Pension Act, or indeed whether a proper OMO service is what was intended by the legislation. Following on from this it appeared that:

1. Trustees and advisers need to ensure that the members obtain the best rates and impaired life rates where appropriate. Therefore, a full OMO service is required.

1. The issue of payment for this service is not straightforward and still outstanding. Fees .v. Commission, and particularly when relating to small funds is not obvious or necessarily has an easy answer.
   

1. It is possible that there are many cases where the optimal results have not been obtained for members and there may be a party vulnerable to regulatory action or litigation.

This significant development in the pension annuity market over the last few years, has however, been the movement and the slowly growing awareness among Trustees of their responsibilities in relation to the incomes of members vesting from a Defined Contribution (money purchase) schemes, including the vesting of Additional Voluntary Contribution (AVC) funds.

The Regent OMO service allows for the member's particular circumstances to be taken into account. This is very important, for example, where the member or spouse might be entitled to an "enhanced annuity" because of an impaired life situation or where a joint life annuity is not necessarily appropriate.

Our ability to source the appropriate annuity or income from the market provides the member and Trustee with the information needed. It allows the Trustees to discuss and provide the necessary information to the members in order that they are able to make proper choices and selection from the OMO available, and thus conform to the Pension Act.

For further information on Regent's OMO service to Pension Scheme Trustees please call 0845 880 0227 or contact us using the Enquiry Form.