“How can government ensure people get the pensions advice they need?”

 

 

I’ll find myself , at the beginning of the day, on a panel charged by Jon Cudby with John Moret and other financial services dignitaries discussing the New Retirement Freedoms

I’ll find myself, at the end of the day, at the Conservative Party Conference on a panel chaired by Andy Davis, Associate Editor, Finance for Prospect, with Harriett Baldwin MP, Economic Secretary to the Treasury, Jeremy Quin MP, Member of the Work and Pensions Select Committee and Carlton Hood, Customer Director, Old Mutual Wealth

This is how Prospect Magazine- who are hosting the event- view the question.

“If, a couple of years ago, you had found yourself standing next to someone at a party who said they were a pension advisor, you would probably have been less than overjoyed. A brief exchange of stilted pleasantries is about the best outcome either of you could have expected.

Things would be rather different if you bumped into the same advisor again this summer: rarely have so many people spent as much time talking about one of the most complex and important financial issues that any of us will face—how to pay our way in the world once we retire; and how can we make sure we can access clear and reliable advice?

An asteroid has struck Planet Pension.

Until the Budget in March 2014, the rules that govern pension saving had developed by a process of sedimentation: year after year governments and regulators deposited layer upon layer of minor changes and tweaks on top of the last, creating a complex landscape that very few people could navigate with any confidence.

Then came a bolt from the blue.

Suddenly, the longstanding obligation on all but the wealthiest retirees to turn their pension fund into a guaranteed income for life via an annuity was scrapped. Instead, we were promised freedom, choice and flexibility.

Robin Keyte, a leading financial planner based in the West Country said that the promise of greater freedom and flexibility in how we can manage our money, along with the move to make undrawn funds inheritable without steep tax charges, is making people he speaks to more willing to save for their retirement.

This supports the notion that the previous regime had come to appear so restrictive and the returns available so unappetising that it had become a disincentive to save.

And beyond that, there is simply the beneficial effect of the government’s bolt from the blue— suddenly people are thinking and talking about pensions as almost never before.

“I do think that all the debate and coverage has made people think more positively about pensions and that has to be a good thing in the long term,”

said Chris Curry, Director of the Pensions Policy Institute.

“If they can see pensions in a more positive light, they must be more likely to want to be part of the system than to avoid them or not to trust them.”

While pension reform is welcome they have created a much more complex set of choices for people who are reaching retirement and many of them risk making unwise or poorly informed decisions that could have far-reaching consequences for them if they don’t have sufficient access to expert advice, and could also have a major impact on the state’s finances if too many of them run out of money part- way through their retirement years”.

 

And for the rest of the day, I’ll be with my colleagues working out how we can convince the industry and Government, that what people want – to quote Paul Lewis, at recent FT events is

“a product that delivers at low-cost with certainty income  for the rest of their lives with some flexibility.

There is a need for advice, a need for guidance and there’s a need for somewhere to invest our pension pot.

And that’s where the debate needs to go!