“Greater regulation of Master Trusts is an absolute necessity. The Master Trust market has grown rapidly, driven by all workers being automatically enrolled into pension schemes. But to date consumers haven’t had the same safety nets as they would get if they were with an insurer.
“The problem to date is that the barriers to entry have been low. Forcing Master Trusts to meet strict new criteria before entering the market is absolutely the right thing to do, as is giving the Regulator more power to improve protection.
“While raising the bar for new entrants to the market is a good step towards protecting individuals, existing participants should also have to demonstrate they can meet the same criteria.
“We would also urge the Regulator to look at how the services within Master Trusts – investment, administration, consulting and communications – are bundled together, to ensure individuals are getting value for money.”
Discussing the early exit fee cap, Noon added:
“Consumers should not be penalised for exercising their freedom to choose how to access their retirement savings. It will be interesting to see the level at which the cap is set. With freedom comes complexity and there needs to be stronger guidance in place to support consumers with the decisions they now need to make. It’s encouraging to see consolidation of the different government advisory services as this should hopefully make it easier for people to know where to turn for support.
“The support people need with the financial choices they have at retirement is greater than a generic service can provide. People are not willing to pay for advice so Government bodies do have an important role to play. But wider adoption of technology that looks at an individual’s personal circumstances, guiding them to a better place, should also help fill the advice gap.”
Commenting on the Lifetime Savings Bill, Noon said:
“We agree with the Government that Lifetime ISAs (LISAs) should encourage the next generation to get into the habit of regular saving. If LISAs are run in parallel with pensions they might help bridge the long-term savings gap. But as with all financial products, there needs to be strong protection in place for consumers to make sure they don’t pay over the odds in fees or invest inappropriately. Offering these through the workplace could help with that.
“Our biggest worry is that LISAs could in due course replace pensions, heralding the end of the pensions system as we know it - along with the generous system of tax relief accompanying it. This would exacerbate an already acute long-term savings crisis; a crisis made worse by lower State pensions for future generations. To avoid this, LISAs must be offered alongside pensions. If the Government is truly committed to ‘freedom to choose’, then we urge it to continue to allow individuals the choice of a pensions as well as LISAs.
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