Pensions - Articles - Aegon response to the DWP consultation on NEST


In response to the DWP consultation on ‘NEST: Evolving for the future’, which closes today, Aegon’s Kate Smith calls on NEST to look to the market rather than attempting to reinvent the wheel.

 Aegon calls on NEST to ‘use the best in the market’ rather than build an in-house retirement income proposition

 • Advice is the missing link
 • Government needs to look more broadly at how trust-based schemes offer access to the pension freedoms

 Kate Smith, head of pension, comments: “Changing attitudes and the introduction of pensions freedoms means retirement is now seen as a transitional process rather than a cliff edge. In response there’s been a rapid pace of change in the retirement income market to develop innovative solutions to meet customers’ demands. It’s absolutely right that over 55s, including NEST members, should benefit from this. The quickest and simplest way to do this is for NEST to set up an in-house panel with a suite of retirement income options, including drawdown, drawdown with guarantees and annuities, allowing members to access the best in the market. By doing that NEST could capitalise on market innovation rather than build an in-house solution at taxpayers’ expense. 

 “One key element missing from NEST’s proposals is advice. It is dangerous to assume this isn’t needed or wanted by NEST members, leaving them to make complex retirement income decisions by themselves. The FCA and HMT’s Financial Advice Market Review is looking at ways to address the advice gap; one outcome may be that advice could become more affordable and therefore more accessible to NEST members.

 “NEST’s desire to expand into the retirement income market is a symptom of a wider market trend as trust-based schemes, particularly mastertrusts, seek to offer unregulated non-advised drawdown giving members greater choice, while retaining funds. This is a growing regulatory gap. Government and regulators should look more broadly at how trust-based schemes offer access to the pension freedoms before NEST jumps to a solution. Selecting a retiree income product is an individual decision, and shouldn’t be made by scheme trustees, which is contrary to the spirit of the pension freedoms.“
  

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