Three years on from the dawn of pension flexibility reforms, the ABI is stepping up efforts to ensure that consumers are getting the best out of their retirement. Today’s report is fuelled by concerns that over half of fully withdrawn pension pots are not spent, but are moved into other savings and investments which could mean consumers are paying too much tax, whilst missing out on compound investment growth.
Retirement decisions are complex and consumers need help to understand their options, identify goals for retirement and how to achieve them. The ABI’s five point plan promotes active consumer engagement – empowering consumers to make their own, well-informed decisions through improved communications and use of guidance.
The five interventions are as follows, and can be read in more detail in the ABI’s report:
Intervention 1: Tailored and phased customer communications throughout a saver’s life
Intervention 2: Creating the mid-life MOT
Intervention 3: Prompting more people to use guidance
Intervention 4: Making the retirement risk warnings fit for purpose
Intervention 5: Improvements to communications once someone has retired
Rob Yuille, Head of Retirement Policy at the ABI, commented:
"Pension freedoms put more power into the hands of consumers, but this flexibility also increased the complexity and risks that consumers face.
“Our recommendations are for interventions that will transform the way people interact with their pension pots and help people navigate their choices. We’re calling on a number of stakeholders today to help us to deliver the practical steps needed to make these interventions happen.”
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