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The ‘Open Market Option’ and your pension choices

Exercise your right to choose an annuity from any provider

Did you know that you do not have to accept the annuity rates offered to you by your pension provider? You have the right to exercise what is known as the Open Market Option. This means you can use your pension fund to buy an annuity with a more competitive annuity provider on the open market.

Shopping around for the right annuity and the best deal available may bring you more retirement income from your pension pot than you think. You may find an annuity that pays more income than your current pension provider is offering.

As the UK's largest pension annuity broker*, we help thousands of people each year to exercise their Open Market Option. On your behalf, we compare your annuity options from leading providers to find you the best rate and income.

See how much retirement income you could receive from your pension savings. Try our free annuity calculator, call our Annuity Specialists on 0800 652 1316 or request a call back.

Click here for your free, no-obligation annuity quote

What is the Open Market Option?

The Open Market Option is your right to buy an annuity or other retirement income solution from any provider. It means you don’t have to buy the annuity offered by your pension scheme provider.

If you are a member of a ‘defined contributions’ personal or company pension scheme, the scheme should contact you as you approach retirement. The scheme should inform you about the value of your pension pot and give you an annuity quotation.

The annuity quotation will tell you how much guaranteed regular income you can expect if you choose to buy an annuity. But this might be just one quotation from one annuity provider – and it may not offer you the highest available income.

This is where you have protection from the Open Market Option. Pension schemes can’t force you to take their annuity product. Instead, you have the right to compare the annuity they offer with what’s available from other providers. It’s your money, so why not make the most of it?

Why is it so important to exercise my Open Market Option pension rights?

Exercising your Open Market Option when considering an annuity could get you more retirement income.

Annuity rates can vary significantly from provider to provider. Each provider frequently reviews their rates, and this can mean that one might be more competitive at a given time than another.

Retirement Line secures you the best deals as we compare any annuity rate and income you’ve been offered against quotes from leading providers.

Also, the volume of business we introduce to the UK’s major annuity providers helps to enable us to obtain the highest preferential annuity rates for you. This could mean you receive thousands of pounds in extra income over the course of your retirement.

We even offer our Best Quote Guarantee. We’ll send you a £250 M&S gift voucher if you receive a better annuity quotation on a like-for-like basis directly from another broker or provider¹.

You may get even more income from an enhanced annuity

It’s important that you don’t miss out on the potential for even more retirement income with an enhanced annuity. Hundreds of conditions can secure you more income, even if you have now recovered from them in some cases. Lifestyle choices such as a history of smoking or drinking could also mean you qualify.

Your pension provider should give you the option of completing a health and lifestyle questionnaire to check your eligibility. However, at Retirement Line we don’t simply send you a questionnaire to complete by yourself. Instead, our Annuity Specialists are specially trained to guide you through the questionnaire by phone. They ask the right questions to ensure every scrap of relevant information is provided to your annuity provider.

We believe that this could increase the likelihood of obtaining the highest income for those who qualify for an enhanced annuity. In fact, we typically secure higher enhanced terms for 80% of our lifetime annuity customers², compared to the national industry average of just 33% (source: FCA Retirement Income Data Sept 2020).

Choosing the most suitable annuity type and options

Choosing the most suitable annuity isn’t just about getting the highest income. It’s important that you also choose the most suitable type of annuity. For example, do you want to commit to a lifetime annuity that pays you an income for life, or a fixed term annuity that keeps your options open?

You may also wish to look at annuity options such as death benefits for your loved ones, or an escalating income that tracks inflation.

If you take a conventional lifetime annuity or enhanced lifetime annuity, you won’t be able to change your annuity or take up different annuity options later down the line. Similarly, a fixed term annuity can lock you in with the provider until the end of the chosen term.

Your choice will therefore affect your retirement income for some time, and possibly for the rest of your life. This is partly why our Annuity Specialists will take time to patiently and clearly explain which annuity options and types are available. This will help you make an informed decision about how best to meet your retirement income needs.

What if my pension scheme offers me the best annuity deal?

It is of course possible that your pension scheme offers you a suitable annuity at a competitive rate. You may for example have a Guaranteed Annuity Rate (GAR) set years ago that may be higher than the best rate currently available.

Even if your pension scheme offers you what appears to be your best annuity option, you can still exercise your Open Market Option. You have nothing to lose from looking into whether another provider can offer you a better deal.

What do industry bodies say about the Open Market Option?

Various financial services organisations have expressed concern about consumers missing out on retirement income. This was why the Open Market Option was covered in a Code of Conduct on Retirement Choices.

This was published in 2012 by the Association of British Insurers. It was created to ‘ensure that customers are equipped with the information they need to understand their options, shop around and make an informed decision about their income in retirement’.

Also in 2012, the National Association of Pension Funds (NAPF) and Pensions Institute published a research report on the fair treatment of pension scheme members. This found that each year, people buying annuities throw away up to £1 billion in lifetime income by failing to shop around for an annuity and not using the Open Market Option.

Compare annuity quotes from the UK’s leading annuity providers

Retirement Line provides instant guaranteed annuity quotes from the UK’s leading annuity providers. These include Aviva, Canada Life, Just, Legal & General, LV, and Scottish Widows. We monitor this annuity panel to ensure we’re always providing the best annuity rates available.

Use our no obligation annuity comparison service and get more annuity income thanks to our preferential annuity rates. And because we take care of all the paperwork and deal with the annuity providers on your behalf, we make choosing the best annuity for you simple and straightforward.

For a free, no-obligation annuity quote, try our online annuity calculator. If you’d prefer to speak with an Annuity Specialist directly, you can call us on 0800 652 1316 or email us at

If we arrange an annuity for you, we will be paid a commission from the provider, which is taken into account when calculating their annuity rate.

Click here for your free, no-obligation annuity quote

¹ Terms & conditions apply

² For calendar year 2022, 79.52% of the lifetime annuities arranged by Retirement Line were on enhanced terms.

  • Aviva
  • Canada Life
  • Just Retirement
  • Legal & General
  • LV
  • Scottish Widows

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