The Pensions Advisory Service (TPAS) has warned that trustees could be found guilty of maladministration if they do not advise members buying an annuity about the open market option (OMO) which presents a pension policyholder with the statutory right to review all of the products available to them at retirement, including all annuity types, on the open market and then to source the best rate offered.

TPAS has warned that if policyholders purchase an annuity without considering the OMO, it may not be classified as a lifetime annuity and could therefore be seen as an unauthorised payment with tax consequences on the policyholder and scheme itself. TPAS has stated that if members can prove that the scheme administrators have failed to inform them about the OMO, they would be entitled to recover any tax they may have paid from the scheme administrators on the grounds of maladministration.