Kathryn Fleming, Head of DC Consulting, Hymans Robetson says: “Today’s consultation is an important next step in moving away from a world where millions of savers are expected to become retirement experts, just at the point they reach one of the most complex financial decisions of their lives. However, guided retirement will only fulfil its potential if the end results genuinely improve the member experience. That means high-quality defaults that reflect member needs, support better behaviours and outcomes, and are complemented by effective communication and engagement. It is also vital that today’s framework doesn’t constrain tomorrow’s solutions. The retirement market is evolving quickly, including through innovations such as retirement CDC, and the regulatory framework needs to continue to create space for that evolution. The aim is significant: turning retirement from a series of difficult choices into a journey where people get much more support to achieve a good outcome.”
Laura Mason, CEO, Retail at L&G says: “We welcome the Government's focus on helping more people turn their pension savings into a sustainable retirement income. There is no one-size-fits-all solution, and Guided Retirement needs to combine greater support with flexibility and choice. A Retirement Collective pension scheme – or Collective Defined Contribution scheme - could be a valuable part of that landscape, but it is one option rather than a predetermined default. By pooling longevity risk and managing investments collectively, it has the potential to deliver higher expected incomes while taking complex decisions out of people's hands.But higher expected income isn't free. CDC involves investment risk and, unlike an annuity, income isn't guaranteed. The goal is to help each member find the right balance for them between income, flexibility and certainty. At L&G, we're developing retirement solutions that combine flexibility earlier in retirement with greater certainty later in life. But making savings last is only half the challenge. Our Decades Ahead research found that 9 million people aged 25–54 are not on track for an adequate retirement and we need to help people both save enough and make those savings work harder in retirement.”
Emma Furlonger, Managing Director of Workplace and Retail Intermediary at Standard Life, said: “We support the principle of Guided Retirement and its potential to improve outcomes for people who need greater support when accessing their pension savings. The pensions system should work for people who engage and also those who don't. Standard Life’s latest Retirement Voice research found that only a third of people aged 50 and over feel confident they know enough about turning their pension savings into an income to make a good decision, underlining the need for more help at this critical point. However, a default should provide an important guardrail rather than become a substitute for engagement and appropriate decision support. People should understand the approach being offered, have meaningful opportunities to consider whether it remains right for them and retain the freedom to choose an alternative. The government rightly positions this as a step forward for private sector workers and point towards the potential it offers to bridge the gap to public sector pension provision, where income is guaranteed. While greater income certainty is a part of the challenge, in our view the biggest gap is the level of income that the average private sector worker can expect from their pension and this will only be addressed by higher contributions and better returns – where the Pension Commission and fewer, bigger DC schemes can provide a solution. The final framework must give providers enough flexibility to develop a range of effective retirement income solutions, while ensuring Guided Retirement and Targeted Support work coherently together, with clear distinction and boundaries. Strong alignment between the DWP, The Pensions Regulator and FCA regimes will be essential to creating straightforward customer and member journeys and delivering better retirement outcomes. We look forward to working with Government and regulators to develop a framework that provides the right support, preserves choice and ultimately delivers better retirement outcomes for pension savers.”
Helen Forrest Hall, Chief Strategy Officer at the PMI, said: "We welcome the Government's focus on helping defined contribution savers achieve more secure and sustainable retirement incomes. Simplicity, stability and savers must be at the heart of pensions policy. Many people would benefit from not being forced to make complex decisions at and throughout their retirement. Achieving that will require a framework that is deliverable in practice, supported by strong governance, clear member protections and sufficient certainty for trustees and providers to make the best decisions for members."
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