Emma RadmoreNikil Rathi has spoken on pensions freedoms. He noted that, with the increasing flexibility consumers have on accessing their pensions savings, it is ever more important for the individual to be sure they are saving enough and the expected returns are enough – and that they have support to make complex decisions.
He spoke of the success of auto enrolment but noted there are still gaps and inadequacies – for instance, some people with 10-20 years to go before retirement did not have access to workplace pensions early enough and were shut out of defined benefit schemes, while the younger generation often feels too stretched with immediate financial commitments to be able to prioritise retirement savings. He looked at the amounts realistically necessary for a moderately good lifestyle in retirement, and discussed initiatives to increase pension contributions by employers. He also considered new ideas such as collective defined contributions, and how the Consumer Duty should be making industry help making good products a default, even for customers who are not really engaged.
He moved on to stress the importance of advisers, whether regulated or not (and the FCA wants them to be), being properly incentivised to give recommendations based on long term value and hen discussed the advice guidance boundary review and the importance of consumers being able to access advice before taking their pensions – because too many do not.