The poll took place as Hymans Robertson gathered a panel of pension experts from across the industry for a webinar to discuss whether trustees should do more to support DB scheme members with the complex decisions they now have to make post freedom and choice.
Carolyn Saunders, Partner at Pinsent Masons commented on the changing role of trustees: “Those Trustees who still believe that it is ‘safer’ to do nothing than to actively communicate with their members are living in a fairy tale. The pension landscape has changed unrecognisably over the last number of years and the real risks now lie in inaction.”
Janine Wood, Independent Trustee at ITS Limited added: “It is time for trustees to stop feeling like it is ‘untrustee-like’ to make members aware of the options that they have on retirement, outside of their DB scheme. Trustees have a duty and a responsibility to make sure their members aren’t left to sleepwalk into poor retirement decisions. I would not wish to be the Trustee who takes a phone call from a dependant where the member had died shortly into retirement, challenging the lack of information they had received when making their retirement decisions. Members need to be sure they really understand the right move for them and that is not always taking a DB pension.
Ryan Markham, Senior Consulting Actuary at Hymans Robertson explained: “Schemes have changed the rules to make it possible for members to access their benefits flexibly, and all the evidence suggests that many more are doing so. The number of people choosing to ‘cash in’ their final salary pension has soared. In the past 6 months we have seen an almost three fold increase in transfers out across our clients compared to pre-April 2015 levels.
”Yet too many schemes are taking a passive approach to both communicating with and supporting their members with the freedoms. Not only does this put members at risk of poor retirement decisions and scams, it also puts trustees and employers at risk of being accused of not providing sufficient information to make an informed choice. Trustees and employers need to mitigate the risk that members will turn around and say, “you didn’t tell me”.
“88% of those listening to our webinar believe this is a real issue. Having made ‘flexibility’ a possibility through rule amendments, schemes now have a responsibility to make sure those flexibilities are communicated properly and can be accessed in a safe and supported environment. If not, we risk seeing a repeat of what is happening with the impaired life annuity market whereby the regulator imposed fines on insurers for not providing ‘sufficient information’ for retirees to make an informed choice. Although it is still early days, the parallels are clear.”
Jamie Barnes, Head of Sales, EBCs and Corporate Partnerships at LV= Corporate Solutions expanded: “In the post-freedoms pensions environment, members are faced with more complex decisions and are increasingly turning to their employer and trustees for support. Employers and trustees can make sure their members receive quality advice by putting specific advice solutions in place, with due diligence on the adviser. As a result, members will have peace of mind knowing the adviser has been appointed by the trustees, while making advice more affordable as a result of working with one scheme. Putting these processes in place will ensure members are able to explore their options in a safe and controlled environment with help and support from their adviser.”
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