Jenny Holt, Managing Director, Customer Savings & Investments at Standard Life said: “We welcome today’s consultation and the opportunity it provides to help people make better informed decisions at the point of and into retirement. While the pension freedoms represented a huge step forward in terms of flexibility, the associated complexity of decision making, means there is still work to do better support people weighing up potentially complex decisions.
“There are a number of areas this consultation will hopefully help address, particularly regarding the consistency of solutions that are presented to savers in trust and contract based schemes. Investment pathways are another area where there’s scope to progress the industry’s thinking as at present they assume that customers want to use their pension pot in just one way. For example, many people targeting drawdown in early retirement may want an annuity in later life but no such option currently exists.
“The consultation is another opportunity to highlight the lack of support most people entering retirement currently receive. We would like to see further action taken to help put more tailored guidance in place and to enable our industry to play a greater role in closing the guidance gap.”
Paul Waters, Head of Digital Wealth at Hymans Robertson says: “It is timely to see the DWP ‘Helping Savers Understand their Pension Choice’ consultation launch at a time when many are facing increasingly challenging decisions in regard to their savings. The consultation presents a significant opportunity for improvements that can deliver better outcomes for the millions of pension savers for whom financial advice may be inaccessible or impractical. We note the consultation reference that trust based pensions may need different interventions to those set out by the FCA for contract based schemes. As far as possible, a single uniform regime for communications and engagement with DC members will help understanding and decision making more than differing rules across the two types of scheme.
“Most importantly the best outcomes will not be delivered by looking at a members’ individual pension schemes in isolation, but by helping them assess and make decisions on what can be delivered from all of their pension schemes in aggregate, along with any other sources of savings or wealth they may have. Savers face a myriad of issues when considering their pensions – not least lack of accessible support, and lack of awareness of where to turn. It is important that the DWP recognises this and builds it into its planning rather than creating more prescriptive rules and guidelines. The impact on individuals beyond financial considerations, such as health, must be accounted for, and these should inform both members and trustees.”
Kate Smith, Head of Pensions at Aegon, comments: “Pension savers face a myriad of complex choices when they approach retirement and they need more help and support to navigate these. The FCA has been leading the way in developing rules, such as wake-up packs from age 50 and then every 5 years, as well as investment pathways, but equivalent rules are absent for members saving in trust-based schemes, including master trusts. We therefore welcome the DWP’s Call for Evidence as fundamentally it makes very little difference to the member as to what type of defined contribution scheme they are saving in, so the type of support they receive shouldn’t be any different for someone saving in a group personal pension or master trust.
“It's still early days for the FCA’s investment pathways, but this is just one side of the coin – how drawdown funds are invested. This doesn’t help with the more tricky challenge of supporting members to make good decisions to avoid running out of money too early. Too much support, and trustees run the risk of crossing the advice boundary. We would encourage the DWP to work with the FCA on this and push back the boundaries.”
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