FSAs independent online annuities tables launched

The open market option gives consumers the freedom to choose whether to buy an annuity from their existing pension provider or to shop around to find the firm offering the best rate. It came into force under new FSA rules introduced last autumn and all firms are now required to write to their customers nearing retirement making them aware of their rights.

The FSAs independent annuities tables will make it easier for consumers to shop around and draw up a shortlist of providers to investigate further. Consumers key in their details such as the actual size of their pension pot, their exact age and the type of annuity they would like. There are several to choose from:

• single life annuities with three escalation and three guarantee options;

• joint life annuities with three survivor, three escalation and three guarantee options; and

• enhanced rates for smokers.

A table will then be produced showing consumers how much monthly income their pension pot could buy them. It will also indicate those providers which offer enhanced annuities for consumers suffering ill health. While the tables are updated on a daily basis, consumers should always check details with the provider before deciding to buy an annuity.

Alan Grant, Manager of the FSA tables said:

"Our independent online tables will make it much easier for you to shop around because they provide rates for your precise age and size of pension pot. You can then make a shortlist of annuities to investigate further.

Taking the time to shop around is important because our research shows it could boost your retirement income. And once youve bought your annuity, youre stuck with it for life you cant change your mind and switch to another provider or a different type at a later date."

The tables are available at www.fsa.gov.uk/tables/ The FSA also publishes a series of guides for consumers on the various types of annuity available and the open market option. These are available on request from the FSA Consumer Helpline on 0300 500 5000.

Notes for editors

1. The average pension pot is 23,000 and two-thirds of annuity purchases are for less than 20,000.

2. The FSAs annuities tables are suitable for consumers with pension pots from personal pensions, stakeholder pensions, freestanding additional voluntary contribution schemes (FSAVCs) and self invested personal pensions (SIPPS). They may also be suitable for S226 policies and possibly for occupational money purchase pension schemes and top ups, but it will depend on the rules of the scheme.

3. For single and joint life annuities there are:

4. three escalation options

   1. a level annuity, providing the same rate of income for life

   2. an escalating annuity, increasing in increments of 3% a year

   3. an RPI linked annuity, where the rate of income increases in line with the retail price index, a measure of inflation

5. and three guaranteed options - none, 5 and 10 years. This means that if you die within the guaranteed period your annuity will continue to be paid out to your partner or estate for the remainder of the guaranteed period that you have chosen.

   For joint life annuities there are three survivor options: 50%, 66.6% or 100%. You have to decide upfront how much your spouses pension will be and when you die the annuity continues to be paid to your spouse at the rate you opted for.

6. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection of consumers; and fighting financial crime.

7. The FSA aims to maintain efficient, orderly and clean financial markets and help retail consumers achieve a fair deal.