Guest Comment: Supporting savers at retirement

Recent policy interest in pension freedoms has revealed what looks like a new consensus between stakeholders. The Work & Pensions Committee’s inquiry into accessing pensions is focusing on advice and guidance, and its witnesses seem to agree this is the right place to look.

The basics are obvious: DC savers must choose when and how to access their pensions; to do so, they need more help from providers and schemes, with a big role for Pension
Wise and now MoneyHelper; and government must act to make these things happen.

Next, it’s important to pin down the detail. It’s not a question of giving people information and helplines and telling them to make a choice, it’s changing processes to make those choices simpler.

As an example, investment pathways require non-advised drawdown customers to choose
one of four options reflecting their pension intention in the next five years.

Early ABI data suggests pathways are being used as intended, with people choosing a range of options, meaning that a single default would have been wrong for many.

Pathways, or something similar, are necessary but no-one is saying they are sufficient. The ABI's new report on pension withdrawals finds that firms would like to go further to support customers and prevent detriment by adding their own choice architecture or guardrails to support customers.

A change in the advice rules would enable them to do more.

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