Consumers are not yet getting what they need from Defined Contribution Pension schemes.
That was the key message from Kay Blair, Vice Chair of the Financial Services Consumer Panel, when she addressed today's Westminster and City conference on Decumulation Policy.
According to the Panel, more needs to be done to ensure members get a fair deal from their DC schemes. That means reducing complexity, addressing high and opaque charges and tackling the cost-effective treatment of small pension pots.
Kay Blair also highlighted the lack of consumer understanding over how much they need to save for an adequate pension pot at a time of falling annuity rates and growing life expectancy.
Kay Blair, Consumer Panel Vice Chair commented:
"People need to save more to ensure a decent income when they retire. The looming savings gap is at best in danger of reducing many people to an uncomfortable retirement and at worst poverty in old age. Increasing life expectancy and falling annuity rates combined with poor public awareness and low savings rates are leaving a gaping hole in consumer finances. With the continuing demise of Defined Benefit schemes, it is critical that more people are encouraged to save in DC schemes. Auto-enrolment is a positive move. But there are still far too many high charging schemes which eat unfairly into yield.
It is imperative that issues like value for money and effective scheme governance are addressed and that communications with consumers can be made in a meaningful way. And when it comes to decumulation, it is vital that people about to retire shop around and ensure they get the most appropriate annuity and the best deal. Members' needs should be higher up the agenda and their expectations managed effectively. "
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