“Few people in the UK Pensions sector command the respect, expertise and authority of Professor David Blake. Accordingly the IRRI study which offers valuable insight during one of the most tumultuous times for UK pensions deserves to be taken seriously.
“Few can object to the tenet underpinning pension freedoms which gives responsibility to individuals to manage their retirement savings, however the report raises some important points that we need to acknowledge and act on.
“The principle of compulsion through automatically enrolling people into a pension is supported by all parties as being in consumers’ best interest! However, we then expect individuals to manage the bewildering array of choices facing them at retirement which requires consumers to have the combined skills of an asset manager, actuary and financial expert to get a good outcome.
“This may place an unreasonable burden onto the shoulders of the average person at retirement - as one wrong choice can have severe consequences – and mean that an individual may run out of money before they die – or unnecessarily live in poverty. Fundamentally, pensions are intended to provide an income throughout retirement and ideally should be accessible, inflation-linked and provide some longevity insurance.
“Helping people to make smart choices around retirement should be a priority and the use of a simple decision tree with a limited set of pathways would support those who struggled to make a choice from the myriad of other options. Approved by the regulator a set of ‘safe harbour’ products would – we believe – see more people achieving desirable outcomes.
“Potentially harder to swallow but no less relevant is the fact that ‘an adequate pension needs adequate contributions’ and to reach this, people (together with their employer) should consider saving 15% of their lifetime earning into a pension scheme. While £55,000 may seem a great deal of money, it is not much if you think that it needs to last potentially over thirty years so people need to be encouraged to save.”
“The report correctly identifies a real need for an Independent Pensions, Care and Savings Commission. Consumers must be protected from short term political tinkering and tax grabs at the expense of future generations. We need to rebuild trust in the Pensions system if it is to deliver a stable Pensions and Care system going forward.”
“In October 2015, Partnership was the first provider to launch a hybrid retirement product – the Enhanced Retirement Account (ERA). This product combined the security of an annuity with the flexibility of drawdown and growth potential of carefully selected investments. We believe that ERA – and other hybrids - has the potential to help many people secure their retirement finances.
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