Claire Altman, Managing Director for Individual Retirement at Standard Life, part of Phoenix Group: “The retirement landscape has changed dramatically in the ten years since pension freedoms and today’s reports recognise the fact that policy and product solutions are still playing catch-up. Those accessing their pensions have a great deal of flexibility and choice but they are also shouldering significant risks when it comes to making their savings last. These challenges mean that two fifths (41%) of retirees will be at high or medium risk of making poor decisions. The report correctly identifies a lack of guaranteed income as one of the most significant challenges for retirees and we agree that blended approaches such as the ‘flex then fix’ model highlighted are part of the solution. Our own modelling shows that a combination of drawdown and annuities can offer an attractive combination of certainty as well as the potential for investment growth. As the government prepares to legislate for default retirement income solutions, the paper acknowledges that two of the key enablers are a reduction in the number of small pots and increased access to guidance and advice. Everyone’s retirement will look different so creating a system that enables people to seek support to maximise their income and one which gives them a comprehensive view of their total savings is critical.”
Paul Waters, Head of DC Markets, Hymans Robertson says: “We welcome today’s report from the Institute of Fiscal Studies and fully support their findings that DC pension scheme members face significant challenges at and through retirement which must be urgently addressed. As the “DC only” generation grows and matures, the impact of the challenges set out in the report, especially the risk of people exhausting their income too early, will become increasingly obvious. Providing DC members with greater protection against longevity risk should be a priority. This can be achieved through DC schemes by building in some form of annuitisation as members get older, or is inherent in the design of CDC, which also offers this protection. Regardless of the design choice, a default approach for members to give them a core path with few tricky decisions should be adopted. As we look to the start of the financial year, mere days away, the challenges that employers face from National Insurance changes, a cost-of-living crisis and a difficult economic outlook are significant. Policy makers recognise this, and in the short term we therefore need to focus on delivering initiatives that do not cost employers more but can improve retirement outcomes for savers. Many of the recommendations in this paper are aligned to this.”
IFS Report on Pension Wealth Throughout Retirement
|
