COBS 19.4 Open market options

In this section:

1. (1)

   ‘intended retirement date’ means:

   1. (a)

      the date (according to the most recent recorded information available to the provider) when the scheme member intends to retire, or to bring the benefits in the scheme into payment, whichever is the earlier; or

   2. (b)

      if there is no such date, the scheme member's state pension age;

2. (2)

   ‘open market option’ means the option to use the proceeds of a personal pension scheme, stakeholder pension scheme, FSAVC, retirement annuity contract or pension buy-out contract to purchase an annuity on the open market; and

3. (3)

   ‘open market option statement ’means:

   1. (a)

      the fact sheet 1“Your pension: it’s time to choose” available on 2www.moneyadviceservice.org.uk,2 together with a written summary of the retail client's open market option, which is sufficient for the client to be able to make an informed decision about whether to exercise, or to decline to exercise, an open market option; or

   2. (b)

      a written statement that gives materially the same information.

1. (1)

   If a retail client asks a firm for a retirement quotation more than four months before the client’s intended retirement date, the firm must give the client an open market option statement with or as part of its reply, unless the firm has given the client such a statement in the last 12 months.

2. (2)

   If a firm does not receive such a request, it must provide a retail client with an open market option statement between four and six months before the client’s intended retirement date.

The firm must:

1. (1)

   remind the retail client about the open market option statement; and

2. (2)

   tell the client what sum of money will be available to purchase an annuity on the open market;

at least six weeks before the client’s intended retirement date.

If a retail client with an open market option tells a firm that he is considering, or has decided:

1. (1)

   to discontinue an income withdrawal arrangement; or

2. (2)

   to take a further sum of money from his pension to buy an annuity as part of a phased retirement,

the firm must give the client an open market option statement, unless the firm has given the client such a statement in the last 12 months.

1. (1)

   3Where a firm communicates with a retail client about the retail client's personal pension scheme, stakeholder pension scheme, FSAVC, retirement annuity contract or pension buy-out contract which is provided by the firm, unless the circumstances in (2) apply, the firm must provide the client with a clear and prominent statement about the availability of the pensions guidance including:

   1. (a)

      how to access the pensions guidance and its contact details;

   2. (b)

      that the pensions guidance can be accessed on the internet, telephone, or face to face;

   3. (c)

      that the pensions guidance is a free impartial service to help consumers to understand their options at retirement; and

   4. (d)

      a recommendation that the client seeks appropriate guidance or advice to understand their options at retirement.

2. (2)

   A firm is not required to provide the client with the statement required in (1) where:

   1. (a)

      the firm communicates with the client for a purpose other than:

      1. (i)

         encouraging the client to think about their open market option; or

      2. (ii)

         facilitating access to the proceeds of the client’s personal pension scheme, stakeholder pension scheme, FSAVC, retirement annuity contract or pension buy-out contract; or

   2. (b)

      the client has already accessed the pensions guidance.