“We agree with comments made by Teresa Fritz from the FSCP that there’s been a huge increase in process-driven but fully-regulated advice services, and that this trend should be welcomed. Since freedom and choice was introduced, decision making around what to do with pensions is now incredibly complicated. It’s hard to see how Pensions Wise can deliver the levels of support required to the number of people involved. Technology can help take the strain and guide people towards better decisions.
“We see this trend emerging clearly in the workplace. Research we conducted earlier this year showed that large UK employers believe their workforce is just as likely to look to their company as to the government for retirement guidance or advice. In recognition of that, employers are increasingly adopting online guidance tools to help individuals understand their own personal circumstances better.
“It’s also important not to forget that the pension freedoms apply to the Defined Benefit (DB) schemes, not just Defined Contribution schemes (DC). People can transfer out of DB into DC to take advantage of the freedoms. The research we carried out earlier in the year showed that almost half of large UK employers are worried about being held liable for failing to prevent employees from making poor decisions through DB-DC transfers. We’re seeing clients taking steps to ensure their employees are getting access to quality advice, to ensure they don’t give valuable DB benefits up for the wrong reasons.
“For the pension freedoms to be a success there needs to be adequate, personalised guidance in place both pre- and at-retirement to ensure people don’t run out of money. Greater support is needed to help people make the right choices in the face of much more complexity. People need advice but are not willing to pay for it. Last year we found that only 22% would be willing to pay for external advice and of those they are only prepared to spend on average just £37 for it. Low cost online tools definitely have a role to play to help fill the advice gap.”
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