This year marks the tenth anniversary of pension freedoms.

I think this is very important, and another reason why later life annuities are part of the answer to financial planning post retirement – our cognitive skills decline in later life more than we realise https://t.co/LbwgcY3Yhh

— Steve Webb (@stevewebb1) January 8, 2024

Well said Steve Webb. I will have the pleasure today of working with LCP on projects that I hope will deliver later life annuities to thousands if not millions of savers for whom the grim prospect of cognitive decline has not been realised.

As Dr Johnson wrote on the Death of Dr. Robert Levet.

Hope’s delusive mine..

One way of looking at the introduction of “pension freedoms” was as an end to the annuity, another – as a reset. The nation breathed a collective sigh of relief when told that “nobody would ever have to buy an annuity again”. But polls of what people want in retirement regularly show that around two third of us answer we want an annuity – a string of payments that last as long as we do. We do so because we cling to the security of an income we’ve had all our lives and a fear that as we get older, we get less able to generate or manage that income for ourselves.

The “reset” was not just about the freedom from a pension but the freedom of a pension , the chance for the pension industry to innovate and find ways of paying pensions that better suited older people than the level annuity.

This year will mark ten years since the Chancellor made his fateful statement in the budget and ten years since Steve Webb endorsed it by saying he did not mind if people chose to use their retirement pot to buy a Lamborghini (probably the most famous quote in pensions).

Quite clearly, Webb did not expect us to be a nation of Lamborghini drivers and it wasn’t long before he was promoting a thousand flowers to bloom in the pension meadow. Sadly, not many of those flowers are blooming today, but I do see, in offices such as LCP’s , the new thinking that should lead to “new pensions”, pensions that command people’s attention for the right reasons,

Because there has to come a time when those two in three people who say they want to exchange a pension for a pot, have the courage to press the button which says “buy now”.

It will not be a compulsory thing, but it should be an easy and natural thing to do. The right decision at the right time of life. This is what Steve Webb’s project to maximise the “utility” or “happiness”, we get from our retirement savings is about.

I hope that he can link his vision of buying a pension at the right time with bigger ideas of how we use the money paid for the pension. The idea of a collective pension scheme that pays people their money back to them over time is not dead, it is notionally in CDC and actually there in the remaining DB schemes we have (many of which are still open to people who  work for certain employers.

I hope we will open the door to a wider audience, to those who have pots and no pensions and have the means to buy back into a wage for life, guaranteed by the savings of others

We need people of the calibre of Steve Webb to make that happen. I am pleased to see so many people I admire, working with him in his current firm. May you prosper commercially and see through the reset you set in place ten years ago.

David Fairs

Steve Webb

Stuart McDonald