In its push towards making the Open Market Option (OMO) as the default choice of investors, the government has entered into detailed discussions with the pension industry representatives.
Representatives from the Association of British Insurers (ABI) and Pension Income Choice Association (PICA) met with government representatives from the Department for Work and Pensions (DWP) and the Treasury.
“The Government are looking to go beyond improving the system we already have by looking at the practical implications of making shopping around the default”, said Tom McPhail – Chairman of PICA and Head of Pensions Research at Hargreaves Lansdown.
“I think policymakers are receptive to the idea of making the Omo the default but they want to be reassured that if we do go down that road it will work. So we’re discussing the detailed specific practicalities of things like how we communicate with people, what do we do if they don’t respond and whether we need to look again a small pots”, he added.
The government had issued a warning in December stating that if insurers failed to take steps to improve OMO administration, then it will be forced to “consider legislative options”, following which ABI came out with a best practices guide in January.