The effect of the upcoming Test-Achats gender neutrality insurance factors on when retirees should use their open market option (OMO) needs to be made clear to avoid a mis-selling scandal, SHILLING Communication has warned.

According to the employee benefits and pensions communication company, it is no longer an open and shut case when male and female retirees should use their OMO.

SHILLING Communication director Katie Frost explained: “Throughout this year, the government has been publically pushing the OMO as a means of improving member benefit levels by shopping around for the best rate.

“However, the introduction of the Test-Achats gender-neutral insurance factors on 21 December will again move the goalposts for employers and members – and it is imperative that this change in situation is adequately communicated to members to avoid any mis-selling scandals. The fact that occupational DC schemes are generally unaffected by the ban on gender-based actuarial factors in pricing annuities means that, in the cases of many men, they may actually be better taking up the quote from the insurer linked to their scheme – as this will still be based on gender-specific factors. Employers should now prioritise the issuing of this information for male members in particular who are approaching retirement, before these members listen to the blanket advertising and take up the OMO straight away.”

Adding to the confusion, Frost said, is that some men will still be able to find a better annuity level by using their OMO after the new guidelines are introduced. She added that the message for members should be clear and simple – research your own circumstances, not just what you read, and don’t commit to anything until you know for certain where the best value lies.

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