The Pensions Regulator

Type of strategy for helping members with open market option

Assisted choice
(trustees direct member
 to advisory firm)

Limited choice
(trustees search the annuity market and make
 recommendation)

Default
(no help for member
 from trustees)

Features
of strategy

scheme facilitates independent financial advice for members
employer may bear the cost
trustees purchase annuity selected by member under open market option
if member does not exercise open market option then annuity is chosen by trustees

trustees appoint an annuity broker to search market for a competitive quote on a basis chosen by member (eg joint life, escalating with guarantee)
trustees may provide assistance (eg meetings) to supplement information required by disclosure
member may take OMO if preferred

trustees appoint an annuity broker to search market on a basis determined by the trustees (eg joint life, if married, escalating with guarantee)
member may take OMO if preferred (Example of this strategy used in the DC module of the regulator's trustee toolkit

Availability of one to one assistance or advice

member is directed to the annuity advisory firm with whom the trustees have a relationship which will offer help to the member to exercise the open market option
member can go to a different IFA or obtain his own annuity quotes

member is encouraged to obtain independent annuity advice at own expense
member can go to IFA or obtain his own annuity quotes

no assistance is offered to the member with the exercise of the open market option
member can go to IFA or obtain his own annuity quotes

Advantages for member

should always lead to an informed decision and ensure benefit is suitable
no cost to member for advice

if IFA is consulted it leads to an informed decision and ensures benefit is suitable
annuity basis is that chosen by member

if IFA is consulted it leads to an informed decision and ensures benefit is suitable

Rules of scheme typically cover

annuity will be provided in the form the member chooses
in the absence of member choice a default annuity that applies
time limits within which member has to act
cost/expenses of advice
if contracted out, how protected rights are dealt with

annuity will be provided in the form the member chooses
in the absence of member choice a default annuity that applies
time limits within which member has to act
if contracted out, how protected rights are dealt with

type of annuity will be provided according to basic information about the member
time limits within which member has to act
if contracted out, how protected rights are dealt with