Pension wake-up packs “still not enough” for many savers

The new pension wake-up packs that will come into effect on 1 November are “still not enough” in the battle to improve retirement income provision,according to Wealth at Work.

Its director Jonathan Watts-Lay has said that the wake-up packs are a good step in the right direction, but need to be backed up by more financial education.

The new packs — sent by providers to savers over the age of 50 — are meant to make it easier for them to review their current financial situation, understand their options and any risks, and make better retirement decisions.

However, Watts-Lay says that financial education and guidance, as well as regulated financial advice, are also needed when people are approaching retirement. This, he says, encourages them to look more holistically at all their finances, and not just their pensions, to ensure they make informed choices.

“Many employers are now seeing the benefits of putting services like this in place for their employees throughout their career,” he said. “This should lead to a workforce who are better equipped to deal with the many complex financial issues that they may face throughout their life, and especially at the crucial point of accessing their retirement savings, leading to improved outcomes for all.”

From 1 November, pension providers have to reduce the size of their wake-up packs and increase their frequency. They must be sent out once every 5 years after an individual reaches 50, until their pension is fully cashed in. They will also need to be sent just before someone retires, whenever they request a retirement quote, and any time they take money out of their pension.

The new packs will also have to include a one-page summary of someone’s pension, information on how to access the government’s Pension Wise service for guidance, and an explanation of the advantages of shopping around for an annuity or income drawdown product.

“Hopefully the simplification and increased frequency of the wake up packs will encourage individuals to take an interest in their pension and retirement earlier,” added Watts-Lay.

“The new packs should be significantly easier to understand. The packs should also make it easier for individuals to decide how they are going to manage their money in retirement, hopefully be wise to potential mistakes, and encourage them to put more aside for their retirement.”

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